Governor Doug Ducey signed legislation that further reduces and streamlines taxes while protecting small businesses from the threat of a 77 percent tax increase.
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“This tax cut will keep Arizona competitive for small businesses already operating here and new businesses flocking here every day,†Governor Ducey said.
“After a year as tough as the last, we should not be raising taxes on our small businesses — we should be cutting their taxes. That’s exactly what Senate Bill 1783 does. Arizona has now passed the largest tax cut in state history and will have the lowest flat tax in the country. My thanks go out to Senator J.D. Mesnard and Representative Ben Toma for their leadership on this issue.â€
Senate Bill 1783 establishes a new and lower alternative small business income tax structure. Under the plan, “small business income†is defined as interest, dividends, profits and certain capital gains.
“Small businesses are the backbone of our economy and integral to the future success of our state,†Senator J.D. Mesnard said.
“Small businesses should be able to grow and reinvest in themselves without being forced to pay astronomical taxes. Rather, government should get out of the way so that they can thrive. That's why I’m so grateful for the support of Governor Ducey and my colleagues in the Legislature.â€
This tax relief will ensure small businesses continue to choose Arizona to start, expand or relocate operations. Small businesses are a core component of our state’s economy, making up more than 99 percent of Arizona’s businesses and employing more than one million people.
Because of the structure of the 3.5 percent surcharge on individual income tax under Proposition 208, small businesses will not be subject to this crippling tax hike.
“It’s a no-brainer to have a separate tax structure for small businesses,†Representative Ben Toma said. “It should be our goal as public servants to make filing taxes easier for Arizonans. This session has been a massive win for Arizona taxpayers. Thank you to the governor and the many who supported this bill.â€
The bill allows taxpayers to exclude small business income from their total individual income. Instead, small business income will be subject to an alternate small business income tax. A flat tax on small business income will phase in over time: