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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
income tax forms; conformity
Purpose
Requires the Arizona Department of Revenue (ADOR), when prescribing income tax forms and instructions, to assume that the Legislature will enact an amendment to state law that results in conformity to the provisions of the U.S. Internal Revenue Code (U.S. IRC) that affect federal adjusted gross income (FAGI).
Background
The Arizona Legislature periodically updates the statutory definition of the U.S. IRC to include any federal provisions that became effective in the preceding calendar year as a means of paralleling the computation of Arizona income tax and other statutory references throughout the Arizona Revised Statutes to the amended U.S. IRC. Tax conformity with the U.S. IRC is deemed necessary because the calculation of Arizona corporate income tax liability begins with federal taxable income. Similarly, FAGI is the starting point for individual income tax assessment.
Conformity means an amendment to A.R.S. § 43-105 that results in adoption of the definition of the U.S. IRC for the taxable year. Nonconformity means either: 1) conformity plus another amendment that does not conform to specific provisions of the U.S. IRC as statutorily defined for the taxable year; or 2) no amendment to the definition of U.S. IRC for the taxable year (A.R.S. § 43-107).
By adopting the income tax statutes, the Legislature declared its intent to adopt the provisions of the U.S. IRC relating to FAGI and federal taxable income, subject only to modifications contained in state law (A.R.S. § 43-102).
All tax returns required by state law must be in a form that is prescribed by ADOR and ADOR must prepare blank return forms and furnish the forms on request (A.R.S. § 43-323).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires ADOR, when prescribing income tax forms and instructions, to assume that the Legislature will enact an amendment to state law that results in conformity to the provisions of the U.S. IRC that affect FAGI.
2. Stipulates that, if the Legislature enacts nonconformity, ADOR must supplement the published forms and instructions related to the nonconformity.
3. Defines terms.
4. Becomes effective on the general effective date.
Prepared by Senate Research
January 21, 2026
MG/hk