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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
business personal property; tax exemption
Purpose
Eliminates the property tax exemption cap for personal property used for agricultural purposes and property used in trade or business (BPP).
Background
The Arizona Constitution grants the Legislature the authority to determine by law the qualifications for, and the amount of, a BPP property tax exemption. Current statute exempts up to $207,366 of BPP from property tax. The Arizona Department of Revenue annually adjusts the exemption amount for the following tax year to account for inflation. For TY 2023, the BPP exemption amount is $225,572. The amount that exceeds the exemption amount is subject to an assessment ratio of 15 percent (Ariz. Const. art. 9, § 2; A.R.S. §§ 42-11127 and 42-15002).
If removing the BPP exemption cap results in a tax shift that affects the obligations of the state, there may be a fiscal impact to the state General Fund.
Provisions
1. Removes the BPP exemption cap.
2. Applies the elimination of the BPP cap to tax years beginning January 1, 2024.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Prepared by Senate Research
February 2, 2023
MG/sr