AZ SB1166

Defines "internal revenue code" for Arizona tax purposes as the U.S. Internal Revenue Code of 1986 as amended on January 1, 2018, including provisions from the Bipartisan Budget Act of 2018 and Consolidated Appropriations Act of 2018 for taxable years 2018.

Allows individual taxpayers who itemize deductions to claim additional deductions in 2018 including state and local taxes not deducted federally, miscellaneous itemized deductions exceeding 2% of federal adjusted gross income, home equity and acquisition indebtedness interest, pass-through entity business losses, and specific depreciation and section 179 property deductions.

Requires corporations to add back section 179 deductions in computing Arizona adjusted gross income but allows a subtraction up to $500,000 (or $500,000 minus excess cost over $2,000,000 if applicable) in computing taxable income for taxable year 2018.

Requires individual taxpayers to add back certain depreciation and section 179 deductions and amounts that would have been excluded under federal section 68 in computing Arizona adjusted gross income for 2018.

All provisions expire December 31, 2019, and apply retroactively to taxable years beginning after December 31, 2017.