SB 1106 Arizona Senate · 57th Legislature - Second Regular Session

internal revenue code; conformity; deductions

SB 1106 clarifies how Arizona aligns its income tax calculations with the federal Internal Revenue Code. It defines "internal revenue code" for tax years starting in specific periods (e.g., 2023-2024, 2024-2025) as the federal tax code as it existed on a fixed date (e.g., January 1, 2024), including retroactive provisions from certain federal laws enacted in prior years. This directly affects Arizona taxpayers and the Department of Revenue when calculating income tax liability. The bill establishes a consistent reference point for Arizona’s tax code each year, avoiding constant updates to match federal changes.

Bill status vetoed 4 of 5 stages cleared

Introduction

Jan 2026

Committee Review

Jan 2026

Senate Passage

Jan 2026

House Passage

Jan 2026

Vetoed

Jan 2026

Introduced Jan 8, 2026 Vetoed Jan 16, 2026

Maddy AI version diff · 1 comparison

What changed between versions

Introduced Version → Senate Engrossed Version (01/15/2026) · 5 edits · Jan 15, 2026

MODERATE

The bill was reorganized and expanded to align Arizona's tax code with future federal tax laws, specifically updating the definition of the 'Internal Revenue Code' to include provisions effective as of January 1, 2026. It added new tax deductions for retirees receiving pension distributions, increased the standard deduction, and introduced a new chapter allowing a state tax credit for contributions to scholarship-granting organizations.

Scope change

The bill's scope expanded from primarily defining tax conformity dates to including new substantive tax benefits (pension deductions and scholarship credits) and updating the effective dates for various deductions to reflect future federal legislation.

TIMELINE

Updated the definition of the 'Internal Revenue Code' to reference the United States code as amended and in effect as of January 1, 2026, ensuring Arizona taxes conform to future federal tax changes.

ELIGIBILITY

Added a new deduction allowing taxpayers aged 60 or older to subtract up to $6,000 from their taxable income for distributions from qualified pension or retirement accounts.

Increased the optional standard deduction amounts for single, head of household, and married filing jointly taxpayers and added an inflation adjustment mechanism.

Added new deductions for qualified tips, overtime compensation, and child/dependent care expenses for taxable years beginning after December 31, 2024.

FISCAL

Created a new Chapter 18 that allows a state tax credit for individuals who make qualified contributions to scholarship-granting organizations, funded by the state rather than the federal government.

Floor votes · House Jan 15, 2026

How they voted

This bill passed the Senate by voice vote (no roll call recorded).

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Jan 16, 2026

Vetoed

Vetoed by Governor

executive

Jan 15, 2026

Upper · Passed

PASSED

upper

Jan 15, 2026

Upper · Passed

upper

Jan 14, 2026

Upper · Passed

upper

1 primary · 1 co-sponsor