Arizona SB 1365: PSPRS; member contributions

Bill Text

SB1365 - 572R - S Ver 

 Senate Engrossed

 citrus; 
 fruit; vegetable; fund; posting

 (now: �property tax; 
 exemption; veterans; disabilities)

 State of Arizona

 Senate

 Fifty-seventh Legislature

 Second Regular Session

 2026

 SENATE BILL 1365

AN 
ACT

amending section 42-11111, Arizona 
Revised Statutes; RELATING to property tax exemptions.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1.1. Section 
42-11111, Arizona Revised Statutes, is amended to read:

START_STATUTE42-11111. Exemption for property; widows and widowers; persons with a total 
and permanent disability; veterans with a disability; definitions

A. The property of widows 
and widowers, of persons with total and permanent disabilities and of veterans 
with service or nonservice connected disabilities who are residents of this 
state is exempt from taxation as provided by article IX, section 2, 
Constitution of Arizona, and subject to the conditions and limits prescribed by 
this section.

B. Pursuant to article IX, 
section 2, subsection F, Constitution of Arizona, the exemptions from taxation 
under this section are allowed as provided in subsections C, D and E of this 
section.

C. The primary residence of a veteran 
with a service-connected disability whose disability rating by the United 
States department of veterans affairs is one hundred percent is fully exempt 
from taxation. The surviving spouse of a veteran whose primary residence is 
receiving the exemption under this subsection may continue to claim the full 
exemption for the surviving spouse's primary residence as long as the surviving 
spouse does not remarry. For the purposes of this subsection, a primary 
residence that is owned by a veteran who is eligible for the exemption under 
this subsection and the veteran's spouse shall be treated as if owned solely by 
the veteran.

D. The property of a 
veteran with a nonservice-connected disability whose disability rating by 
the United States department of veterans affairs is one hundred percent or less 
or with a service-connected disability whose disability rating by the 
United States department of veterans affairs is less than one hundred percent 
is exempt in the amount of $4,188. The limit under this subsection 
is further limited by multiplying the total exemption amount by the percentage 
of the veteran's disability, as rated by the United States department of 
veterans affairs.

E. The property of a widow 
or widower or a person with a total and permanent disability is exempt in the 
amount of:

1. $4,188 if the person's 
total assessment does not exceed the amount provided in paragraph 2 of this 
subsection. 

2. No exemption if the 
person's total assessment exceeds $28,459.

F. On or before December 
31 of each year, the department shall increase the following amounts:

1. The total allowable 
exemption amount under subsection D and subsection E, paragraph 1 of this 
section based on the average annual percentage increase, if any, in the GDP 
price deflator in the two most recent complete state fiscal years.

2. Beginning in tax year 
2026, the total assessment limit amount under subsection E, paragraph 2 of 
this section based on the average annual percentage increase, if any, in the 
federal house price index for the two most recent complete state fiscal years.

3. The total income limit 
amounts under subsection H, paragraphs 1 and 2 of this section based on the 
average annual percentage increase, if any, in the GDP price deflator in the 
two most recent complete state fiscal years.

G. For the purpose of 
determining the amount of the allowable exemption pursuant to subsection E 
of this section, the person's total assessment shall not include the value of 
any vehicle that is taxed under title 28, chapter 16, article 3.

H. Pursuant to article IX, 
section 2, subsection F, Constitution of Arizona, to qualify for an THE exemption ALLOWED under SUBSECTION E OF this section, the total income from all sources 
of the claimant and the claimant's spouse and the income from all sources of 
all of the claimant's children who resided with the claimant in the claimant's 
residence in the year immediately preceding the year for which the claimant 
applies for the exemption shall not exceed:

1. $34,901 if none of the 
claimant's children under eighteen years of age resided with the claimant in 
the claimant's residence.

2. $41,870 if one or more 
of the claimant's children residing with the claimant in the claimant's 
residence either:

(a) Were under eighteen 
years of age.

(b) Had a total and 
permanent physical or mental disability, as certified by competent medical 
authority as provided by law.

I. For the purposes of 
subsection H of this section, "income from all sources" means the sum 
of the following, excluding the items listed in subsection J of this section:

1. Adjusted gross income 
as defined by the department.

2. The amount of capital 
gai