SB 1178 Summary

• Adds sunset provisions to numerous tax exemptions and deductions in Arizona's transaction privilege (sales) tax, effective January 1, 2027, requiring these exemptions to expire unless affirmatively renewed by the legislature.

• Sunsets exemptions and deductions across multiple business classifications including retail, transporting, utilities, telecommunications, publication, job printing, transient lodging, personal property rental, amusement, and restaurant classifications.

• Sunsets exemptions for specific tangible personal property including machinery and equipment used in manufacturing and mining, agricultural equipment, aircraft and aviation-related property, and various medical and educational items.

• Reduces the tax base for prime contracting from 65 percent to 100 percent of gross proceeds beginning January 1, 2027, eliminating the current deduction that reduces taxable income for construction businesses.

• Requires a two-thirds affirmative vote in both houses of the legislature for enactment under Arizona Constitution Article IX, Section 22.