Governor Katie Hobbs Signs Executive Order Taking Steps to Cut Taxes for Middle Class Arizonans

Phoenix, AZ ~ Phoenix, AZ - In a move to provide relief for hard-working Arizonans, Governor Katie Hobbs has signed Executive Order 2025-15 Cutting Taxes for Hard-Working Arizonans. The order directs the Arizona Department of Revenue (ADOR) to update state tax forms to allow taxpayers to benefit from the Middle Class Tax Cuts Package on their 2025 taxes.

Under the Executive Order, tax forms for the upcoming year will be revised to include the higher standard deduction that was recently passed into law by H.R. 1. Additionally, ADOR will include instructions for taxpayers to take advantage of deductions on tips, overtime, car loan interest, and additional deductions for seniors in anticipation of these measures being codified into law by the legislature.

Governor Hobbs expressed her commitment to delivering this tax cut for middle class Arizonans, stating that it is necessary to provide relief for families who are struggling with increasing costs of living. She also urged the legislature to join her in immediately passing her Middle Class Tax Cuts Package at the beginning of session in order to provide certainty for taxpayers as they file their taxes.

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The Middle Class Tax Cuts Package aims to bring state tax forms in line with portions of H.R. 1 that benefit middle class Arizonans. Governor Hobbs emphasized the importance of passing this package at the start of the new year in order to create certainty for taxpayers and ease the cost of living crisis.

The package includes measures such as increasing the standard deduction on state tax forms from $15,000 to $15,750 for single filers and $31,500 for joint filers. It also adds an additional $6,000 deduction for Arizonans over 65 and allows deductions on tipped income and eligible overtime income. Furthermore, it allows deductions on interest paid on car loans for new American-made vehicles.

To illustrate how these changes would affect a hypothetical middle class Arizonan, the press release provided an example of Sally, a 68-year-old single individual who earns tips and works full time at a casino in Arizona. Under the current tax laws, Sally's Arizona return would show a taxable income of $60,000 and a state tax of $1,500. However, if the Middle Class Tax Cuts Package is adopted by the legislature, Sally's taxable income would decrease to $41,250 and her state tax would be reduced to $1,031, resulting in a $469 tax cut.

Governor Hobbs also clarified that any further tax conformity provisions affecting corporations and high earners will be negotiated in the FY27 budget.

The Executive Order can be viewed on the Governor's website. With this move, Governor Hobbs has taken a significant step towards providing much-needed relief for middle class Arizonans.

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