AZ HB2526

Defines "internal revenue code" for Arizona tax purposes as the U.S. Internal Revenue Code of 1986 as in effect on January 1, 2018, including provisions from the Bipartisan Budget Act of 2018 and Consolidated Appropriations Act of 2018 with retroactive effective dates for taxable years 2017-2018.

Allows individual taxpayers who itemize deductions to add back certain depreciation allowances and section 179 deductions that were not deducted federally, and to deduct state and local taxes, miscellaneous itemized deductions, home equity interest, and business pass-through losses that exceeded federal limits.

Allows individual taxpayers to deduct section 179 business property deductions up to $500,000 or $500,000 minus amounts exceeding $2,000,000 in placed-in-service costs, whichever is less.

Requires corporations to add back section 179 deductions to Arizona gross income but allows a subtraction of up to $500,000 of section 179 deductions (subject to the $2,000,000 threshold reduction).

All provisions apply retroactively to taxable years beginning after December 31, 2017 and are repealed effective December 31, 2019; the bill is declared an emergency measure effective immediately.