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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
2025-2026; taxation; omnibus
Purpose
Extends, until June 30, 2029, the specified purposes for which a public school may use monies contributed for the purposes of the Public School Extracurricular Activity Fees Tax Credit. Increases, effective January 1, 2026, the business personal property tax exemption to $500,000.
Background
Business Personal Property Tax Exemption
Personal property is classified and valued by each county assessor, except for centrally assessed personal property which is valued by the Arizona Department of Revenue (ADOR). After the county assessor values locally assessed personal property, it is placed on the personal property tax roll. Locally assessed personal property, except manufactured housing or mobile homes, is assessed based on the property's full cash value (A.R.S. §§ 42-13304; 42-15053; and 42-19002).
The Arizona Constitution grants the Legislature the authority to determine by law the qualifications for, and the amount of, a property tax exemption for personal property used in trade or business or for agricultural purposes. Current statute exempts up to $207,366 of specified personal property used in trade or business or for agricultural purposes from property tax. The exemption is commonly referred to as the business personal property tax exemption. ADOR annually adjusts the exemption amount for the following tax year to account for inflation. For TY 2025, the exemption is $269,905 (Ariz. Const. art. 9, § 2; A.R.S. §§ 42-11127 and 42-15002).
Each person that owns or has control of taxable personal property must annually deliver a correct report of property to the county assessor by April 1. The self-report is used to identify taxable personal property. Certain personal property used in trade or business or for agricultural purposes is exempt from the requirement to provide a property report (A.R.S. § 42-15053).
Public School Extracurricular Activity Fees Tax Credit
Statute allows
for a credit against individual income tax liability for fees paid or cash contributions
made to a public school for: 1) standardized testing for college credit or
readiness; 2) the career and technical education industry certification assessment;
3) preparation courses and materials for standardized testing; 4)
cardiopulmonary resuscitation training; 5) extracurricular activities; and 6)
character education programs. Laws 2019, Chapter
164 authorized additional purposes for contributions until June 30, 2022,
including: 1) the acquisition of specified capital items; 2) community school
meal programs; 3) student consumable health care supplies; and
4) playground equipment and shade structures for playground equipment. In 2021,
the Legislature extended the expiration date for the additional authorized
purposes until June 30, 2024 (Laws 2021, Ch. 412).
For the purposes
of the Public School Extracurricular Activity Fees Tax Credit, a
public school is a school that is a part of a school district, a career
technical education district or a charter school (A.R.S.
§ 43-1089.01).
The Joint Legislative Budget Committee's FY 2026 budget analysis includes estimates on the provisions of S.B. 1749 (JLBC Budget Bills As Introduced).
Provisions
1. Increases, effective January 1, 2026, the business personal property tax exemption to $500,000.
2. Extends, until June 30, 2029, and retroactive to June 29, 2024, the use of Public School Extracurricular Activity Fees Tax Credit contributions for the following authorized purposes:
a) the acquisition of outlined capital items;
b) community school meal programs;
c) student consumable health care supplies; and
d) playground equipment and shade structures for playground equipment.
3. Makes technical changes.
4. Becomes effective on the general effective date, with a retroactive provision and delayed effective date as noted.
Prepared by Senate Research
June 16, 2025
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