(The Center Square) – A recently introduced bill would increase the amount of adoption-related expenses that families can subtract from their income taxes.
House Bill 2155, sponsored by Rep. Rachel Keshel, R-Tucson, would increase the subtractable amount eligible from $3,000 to $5,000 for singles or heads of household, or $10,000 for married couples who file their taxes together.
“The amount of unreimbursed medical and hospital costs, adoption counseling, legal and agency fees and other nonrecurring costs of adoption,” would be under the purview of what costs would be eligible, which is already state law.
The proposed subtraction comes as cost of living in Arizona and nationwide saw a significant hike in recent years, with the Phoenix metropolitan area once seeing a year-over-year inflation rate of 13% in 2022, according to the United States Bureau of Labor Statistics.
The Grand Canyon State currently has a 2.5% flat income tax, which is one of the lowest tax rates in the country outside of states that do not have one at all.
If signed into law by Gov. Katie Hobbs, it would go into effect on Dec. 31, 2025.
There are various proposed state tax policy changes circulating this session from Republican lawmakers, including ending taxes on cash tips, which President-elect Donald Trump is seeking to accomplish at the federal level this year. Some tax cuts, like the end of the municipal rental tax, went into effect this year after a compromise between the Republicans and the governor.