AZ HB2785

Updates Arizona's conformity to the Internal Revenue Code from January 1, 2025 to January 1, 2026, adopting federal tax law changes that became effective during 2025.

Incorporates provisions of Public Law 119-21 retroactively for taxable years beginning from and after December 31, 2021 through December 31, 2025.

Adds new subtractions from Arizona gross income for federal deductions including qualified individual deductions, qualified passenger vehicle loan interest, qualified tips, and qualified overtime compensation under specified Internal Revenue Code sections.

Changes the standard deduction calculation to align with the federal basic standard deduction amount for the taxpayer's filing status as of January 1, 2026, replacing previous fixed dollar amounts.

For taxable years beginning after December 31, 2025, allows an increased standard deduction for charitable contributions up to $1,000 for single filers or $2,000 for married couples filing jointly.