HB 2785 Arizona House · 57th Legislature - Second Regular Session

conformity; internal revenue code; deductions

HB 2785 aligns Arizona's income tax calculations with specific versions of the federal Internal Revenue Code (IRC) for different tax years. It requires Arizona to adopt the IRC as it existed on a fixed date (e.g., January 1, 2026 for 2025 tax returns), including retroactive federal provisions enacted during that year, but excluding changes after that date. This directly affects Arizona taxpayers and the Department of Revenue, as it dictates which federal tax rules apply when calculating state income tax. The bill establishes a year-by-year framework, specifying which federal tax law version Arizona must use for taxable years starting between 2017 and 2026. It does not create new tax benefits or penalties but sets a fixed reference point for tax calculations.

Bill status vetoed 3 of 4 stages cleared

Introduction

Jan 2026

Committee Review

House Passage

Feb 2026

Vetoed

Feb 2026

Introduced Jan 29, 2026 Vetoed Feb 12, 2026

Maddy AI version diff · 1 comparison

What changed between versions

Introduced Version → House Engrossed Version (02/11/2026) · 4 edits · Feb 11, 2026

MODERATE

This bill updates Arizona's tax code to align state definitions with the U.S. Internal Revenue Code as it exists in 2026, specifically incorporating retroactive provisions from recent federal legislation like the Inflation Reduction Act. It also expands the list of federal laws considered for tax calculations back to 2018 and adjusts the standard deduction for charitable contributions. Additionally, it increases the maximum subtraction for unreimbursed medical and adoption expenses from $3,000 to $5,000 for individuals and $10,000 for married couples starting in 2026.

Scope change

The bill expands the scope of federal laws referenced for tax calculations to include provisions from 2018 through 2024, whereas previous versions only included laws up to 2022 or 2025 depending on the specific section.

DEFINITION

Updated the definition of 'Internal Revenue Code' to include all federal tax provisions effective as of January 1, 2026, including retroactive changes from laws passed in 2024 and 2025.

TIMELINE

Added new subsections to explicitly include retroactive provisions from Public Law 119-21 (the Inflation Reduction Act) for tax years beginning after December 31, 2024, and expanded historical references back to 2018.

FISCAL

Increased the maximum dollar amount taxpayers can subtract for unreimbursed medical and adoption expenses from $3,000 to $5,000 for single filers and from $3,000 to $10,000 for married couples filing jointly, effective for tax years beginning after December 31, 2025.

REQUIREMENT

Modified the standard deduction calculation to increase the charitable contribution limit from 25% of the standard deduction to 100% for tax years between 2021 and 2025, and to the full amount of contributions for tax years beginning after December 31, 2025.

Floor votes · House Feb 11, 2026

How they voted

32–26

Passed · 2 other

Total votes 60

Feb 11, 2026

D Democratic27

26 Nay 1

96% Nay

R Republican33

32 Yea 1

96% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Feb 12, 2026

Vetoed

Vetoed by Governor

executive

Feb 11, 2026

Lower · Passed

PASSED

lower

Feb 10, 2026

Lower · Passed

DPA

lower

Feb 4, 2026

Lower · Passed

DPA

lower

1 primary · 0 co-sponsors