income tax; subtraction; retirement distribution

SB 1371 amends Arizona's income tax code to clarify and update specific deductions taxpayers can claim against their state taxable income. The key provision sets a $2,500 annual limit on deductions for retirement benefits received from federal or Arizona state retirement systems (like public employee pensions). Other clarified deductions include certain military compensation, unreimbursed medical/adoption costs (up to $3,000), and specific business-related expenses like depreciation calculations. This bill directly affects Arizona residents and businesses filing state income tax returns who claim these deductions.