AZ HB2531

Increases Arizona's standard deduction by approximately 29% for taxable years beginning after December 31, 2024: from $12,200 to $15,750 for single filers, from $18,350 to $23,625 for heads of household, and from $24,400 to $31,500 for married couples filing jointly.

Creates new Arizona income tax subtractions for enhanced senior deductions, qualified tips, and qualified overtime compensation that mirror corresponding federal deductions under the Internal Revenue Code, applicable for taxable years 2025 through 2028.

Increases the maximum subtraction for adoption expenses from $3,000 to $5,000 for single filers and $10,000 for married couples filing jointly, effective for taxable years beginning after December 31, 2025.

Establishes a new inflation adjustment mechanism for the increased standard deduction amounts beginning in taxable year 2026, separate from the existing adjustment that will apply through 2024.

Applies retroactively to taxable years beginning from and after December 31, 2024.