Overview
- Gov. Katie Hobbs signed the budget into law in mid‑June, formally approving an $18.29–$18.3 billion spending plan negotiated with Republican leaders.
- The package conforms Arizona tax law to most provisions of the federal H.R.1 changes, producing about $1.4–$1.45 billion in tax cuts spread over several years.
- Key tax changes take effect July 1 and include eliminating state taxes on tips and overtime, raising the standard deduction, a new senior credit, and an expanded child tax credit next year.
- The deal pauses new data‑center sales‑tax exemptions for three years and trims most state agencies by about 2.5% after negotiators scaled back larger proposed cuts.
- Economists warn the budget worsens medium‑term fiscal risks because spending has risen sharply since 2019 and projected general‑fund cash reserves fall to roughly tens of millions of dollars, a level many analysts call unsustainably low.