Budget & Taxes (Property Tax)

HB 2394 amends Arizona's property tax code to create new deductions for contractors in the "prime contracting classification," primarily affecting construction businesses and manufactured building dealers. It allows contractors to exclude specific costs from their taxable base, including land sales (up to fair market value), groundwater monitoring equipment, unattached furniture/fixtures, military reuse zone projects (with qualification), environmental cleanup work, and machinery/equipment with "independent functional utility." To claim certain deductions (like military or environmental projects), contractors must obtain a pre-work letter of qualification from the Department of Revenue. This bill does not change tax rates for homeowners but adjusts taxable income for specific contractor activities. The title referencing "residential property" is misleading, as the changes apply to contractor tax calculations, not residential property owners.

This constitutional amendment (SCR 1003) proposes adding virtual currency to Arizona's list of property tax-exempt assets. It defines virtual currency as a digital representation of value functioning as a medium of exchange, unit of account, and store of value (excluding U.S. dollars or foreign currency). If approved by voters, it would exempt virtual currency holdings from property taxation for Arizona residents who own such digital assets. The proposal requires voter approval at the next general election to take effect, as it amends the state constitution.