Arizona tax return changes for 2026

The legislature’s summary of HB 4168 (Chapter 140) updates the Arizona definition of the Internal Revenue Code to the Code in effect on January 1, 2026. For tax years from 2025 it adds subtractions for qualified tips, qualified overtime and the federal senior deduction, and for 2025 only a subtraction for qualified passenger vehicle loan interest.

• Standard deduction, retroactive to January 1, 2025: $15,750 single or married filing separately, $23,625 head of household, $31,500 married filing jointly.
• From 2026, standard deduction filers may add charitable gifts, capped at $1,000 (single or separate) or $2,000 (joint).
• From 2026, itemizers may deduct up to $10,000 of state and local taxes in place of the federal amount.
• From 2026, the federal special depreciation allowance for qualified production property is added back on individual and corporate returns.

In January 2026 ADOR told filers that anyone claiming the overtime, tips, vehicle loan interest or $6,000 senior deductions might need to amend depending on legislative action, and that 2025 amendments filed by October 15, 2027 would not draw penalties or interest. ADOR estimated that about two-thirds of filers were unaffected.

Work from your list of 2025 Arizona filers with a Schedule 1-A. Those are the returns to reopen.

Amendment work is easier to price when you can see which clients are affected in one view. Tag the Schedule 1-A clients in HelloBooks practice management and track each amended return to completion. Arizona penalty rules are summarised at /us/penalties/arizona and sales tax at /us/sales-tax/arizona.