Overview
- Gov. Katie Hobbs signed the fiscal year 2027 budget on June 13, 2026, finalizing an $18.29–$18.3 billion bipartisan spending package after months of negotiations and an earlier veto.
- The package delivers $1.4 billion in middle-class tax relief phased over multiple years and includes no state tax on tips or overtime, a larger standard deduction, expanded child tax credits, a new child care tax deduction, and extra relief for seniors.
- Lawmakers moved Arizona into temporary conformity with President Donald Trump’s federal tax changes for this filing year to prevent residents from having to refile returns after the Department of Revenue had issued forms assuming full alignment.
- The budget imposes a three-year moratorium on new data-center tax exemptions, a pause that curtails a key incentive tool used to attract large tech and generative-AI investments to the state.
- Negotiators traded deeper cuts for targeted spending: planned agency reductions were scaled from about 5% to roughly 2.5%, the universal school voucher program remains unchanged with no new guardrails, and the bill funds border security, education, child safety, wildfire suppression, rural hospitals and school meals.