SB 1638 Arizona Senate · 57th Legislature - Second Regular Session

conformity; internal revenue code; deductions.

SB 1638 aligns Arizona's state income tax calculations with specific versions of the federal Internal Revenue Code for different tax years. For example, tax returns for 2026 will use the federal tax law as it existed on January 1, 2026, while 2025 returns will reference the law as of January 1, 2025. This affects Arizona taxpayers and the Department of Revenue by establishing clear reference points for tax calculations instead of using a single federal code version. The bill does not create new deductions or change tax rates but ensures Arizona's system matches federal law as it was enacted on designated dates.

Bill status introduced 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 3, 2026 Last action Feb 11, 2026

Maddy AI version diff · 1 comparison

What changed between versions

Introduced Version → Senate Engrossed Version · 4 edits

MODERATE

This bill was amended to update references to specific federal tax laws and adjust the effective dates for retroactive tax provisions. The changes clarify which federal public laws apply to Arizona's income tax calculations for various taxable years, ensuring alignment with federal legislation including the Inflation Reduction Act and other recent tax measures.

Scope change

The bill's scope was expanded by adding a new section (Section 43-1122) that defines specific subtractions from Arizona gross income for corporations, including provisions related to cryptocurrency transactions and other corporate deductions.

TIMELINE

Updated retroactive effective dates for federal tax provisions to reference specific public laws (e.g., Public Law 119-21) instead of general year references for taxable years beginning after December 31, 2024 through December 31, 2025.

DEFINITION

Modified definitions of 'internal revenue code' to explicitly include provisions from Public Law 119-21 for various taxable years, replacing previous references to general effective dates.

REQUIREMENT

Added new Section 43-1122 establishing 23 specific subtractions from Arizona gross income for corporations, including provisions for cryptocurrency exchanges, eligible access expenditures, and other corporate deductions.

TECHNICAL

Changed bill version designation from 'Introduced Version' to 'Senate Engrossed Version' and corrected formatting inconsistencies throughout the document.

Floor votes

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Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Feb 11, 2026

Upper · Passed

DPA

upper

Feb 5, 2026

Upper · Passed

DPA

upper

1 primary · 0 co-sponsors