The Arizona Department of Revenue (ADOR) has outlined the impact of Governor Hobbs’ recent Executive Order on the state’s 2025 individual income tax forms. The department explained that these forms are designed to match federal tax law and reflect the governor’s directive, which seeks to simplify tax filing, reduce administrative costs, and provide financial relief for Arizona residents.
According to ADOR, taxpayers do not need to delay filing their taxes this year. Each year, Arizona releases its individual income tax forms before the state legislature acts on changes made to the federal Internal Revenue Code. However, if a taxpayer claims a provision that is later changed by legislative action, they may need to file an amended return. ADOR stated, “If taxpayers must file an amended return, DOR will provide guidance, and taxpayers would not be subject to penalties or interest provided they amend their 2025 tax year return by October 15, 2027.”
Arizona has followed federal standard deduction amounts since 2019. Without Governor Hobbs’ executive order, there could have been confusion for nearly 90 percent of Arizona taxpayers who claim the standard deduction each year. This scenario could have resulted in millions of amended returns and increased processing costs for the state.
The executive order directed ADOR to include five provisions in the new tax forms: an increased standard deduction; subtractions for seniors aged 65 and older; qualified tip income; qualified overtime compensation; and qualified vehicle loan interest. The released forms include all these elements.
If the legislature passes a conformity bill consistent with what ADOR has already issued, no further amendments will be necessary from taxpayers. However, significant changes outside these provisions—such as those proposed in SB 1106—could increase costs for the department depending on how many Arizonans use them.
ADOR noted that it prepares annual state income tax forms based on changes in federal law as part of its regular process. This approach is guided by state law requiring that federal adjusted gross income serve as the starting point for calculating Arizona income tax—a practice followed for over three decades.
“Using a different starting point would make filing more complicated for taxpayers and tax preparers and would not reflect how Arizona’s tax system is designed,” according to ADOR.
