(The Center Square)— Arizona renters have a slightly lower monthly payment on the horizon thanks to an agreement in Phoenix.
Gov. Katie Hobbs signed a rental sales tax ban bill into law on Tuesday, a key legislative goal of the Republicans at the Capitol.
Senate Bill 1131 prevents municipalities from charging a sales tax on renters, which many cities and towns have in place throughout the state, including Phoenix. However, the bill will not go into effect until Jan. 1, 2025, as part of the compromise between the governor and Republicans. Senate Republicans, in a news release, said that this would ultimately serve as an adjustment period for municipalities that currently charge the tax.
“Charging a rental tax is bad tax policy,” said Senate President Warren Petersen said in a news release. “In fact, Arizona is one of only two states in the nation currently allowing this. While our first attempt at eliminating the tax passed out of the Legislature with solely Republican support and was eventually vetoed by the Governor, we’re grateful our Democrat colleagues came to the table with us and realized the real, tangible relief this reform will provide.”
Critics of the previous rental tax bill vetoed by the governor in February, including the Arizona League of Cities and Towns, were concerned that municipalities would lose a significant source of tax revenue for services.
Her signature on a different version of the bill this time around was part of the deal with Republican leadership to get a Prop 400 extension on the ballot in 2024. Prop 400 is a half-cent sales tax in which the revenue is used to fund transportation infrastructure and has been approved by voters twice, once in 1984 and in 2004.
In a news release, the governor did not address the rental tax bill other than recognizing it was signed. Instead, she touted bipartisanship regarding the Prop 400 bill deal.
“Today, we showed we can put politics aside and work across party lines to get big things done for Arizona,” she said. “I’m proud to sign this bill into law that will create hundreds of thousands of jobs, build and attract businesses, and help make Arizona the best place to work, live, and raise a family. With support spanning across political parties, businesses, workers and everyday Arizonans, Prop 400 will secure our economic future and give every Arizonan an opportunity to succeed in our thriving economy.”
