AZ HB2935

Allows first-time home buyers to subtract down payment amounts from Arizona gross income for state income tax purposes, effective for taxable years beginning after December 31, 2026.

Permits subtraction of retirement account distributions used as down payments on residential property by first-time home buyers, also effective after December 31, 2026.

The down payment subtraction has a maximum cap amount that is left blank in the bill text (to be determined).

Separately increases the adoption expense subtraction from $3,000 to $5,000 for single filers and $10,000 for married couples filing jointly, effective after December 31, 2025.