Arizona GOP Pushes Second Tax Conformity Bill, Headed for Veto

Democratic Gov. Hobbs expected to reject Republican effort to fully align state tax code with federal changes

Published on Feb. 11, 2026

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Arizona Republicans have passed a second bill to fully conform the state's tax codes to recent federal changes from the 'One Big Beautiful Bill' signed by former President Trump. However, Democratic Gov. Katie Hobbs is expected to veto the legislation, as she did with a previous GOP-backed conformity bill. Hobbs wants a more limited alignment that would result in smaller state tax cuts.

Why it matters

The tax conformity issue has become a political flashpoint in Arizona, with Republicans and Democrats at odds over the fiscal impacts and implications. The dispute highlights the partisan divide in the state as Arizonans begin filing their taxes for the year.

The details

The Republican bill would result in an estimated $441 million in state tax cuts this year by fully aligning Arizona's tax code with the federal changes. Hobbs has proposed a 'Middle Class Tax Cuts Package' that would partially conform to the federal adjustments, excluding some business tax breaks that would reduce state revenues by around $100 million annually.

  • Arizona lawmakers rushed to pass the first conformity bill at the start of the legislative session.
  • Hobbs vetoed the initial GOP-backed conformity bill.
  • Arizonans have begun filing their 2026 tax returns.

The players

Katie Hobbs

Democratic Governor of Arizona who is expected to veto the latest Republican tax conformity bill.

Arizona Republicans

GOP state legislators who have pushed through two bills to fully conform Arizona's tax code to recent federal changes, despite opposition from the Democratic governor.

Priya Sundareshan

Democratic State Senate Minority Leader who proposed amending the Republican bill to focus solely on the standard deduction, but the amendment failed.

Warren Petersen

Republican State Senate President who argued the GOP bill is needed to avoid confusion for taxpayers and aligns with the tax forms already issued by the state.

Mitzi Epstein

Democratic State Senator who dismissed concerns about taxpayers having to refile, arguing the only people worried are large corporations and high-income filers.

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What they’re saying

“Republican legislators are holding middle class tax cuts hostage to deliver tax breaks to special interests and billionaires.”

— Liliana Soto, Spokeswoman for Gov. Hobbs (Arizona Mirror)

“This is the second attempt we are seeing at tax conformity. Unfortunately, this bill is worse than before. It holds tightly to the tax cuts for the wealthiest and the corporations.”

— Priya Sundareshan, State Senate Minority Leader (Arizona Mirror)

“I say, 'forms, schmorms.' The only people worried about the forms are large corporations and taxpayers who make over $500,000 a year who may have to refile.”

— Mitzi Epstein, State Senator (Arizona Mirror)

What’s next

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The takeaway

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