AZ HB2747

Creates a new Arizona income tax subtraction allowing individuals and corporations to exclude income derived from small businesses that have been in operation for five years or less, effective for taxable years beginning after December 31, 2026.

Defines "small business" for individual taxpayers as sole proprietorships, partnerships, LLPs, LLCs, S corporations, or other pass-through entities that employ fewer than ten employees.

Defines "small business" for corporate taxpayers as any corporation employing fewer than ten employees.

Amends Arizona Revised Statutes sections 43-1022 (individual income tax subtractions) and 43-1122 (corporate income tax subtractions) to add this new subtraction.

Applies to income from qualifying small businesses regardless of the amount of income received, with no cap specified on the subtraction amount.