Arizona

Arizona legislature repealed estate tax provisions in 2006; no inheritance or gift tax

“Following the federal repeal, the Arizona legislature repealed the Arizona estate tax provisions (Laws 2006, Ch. 262, §3). Arizona does not impose an inheritance or gift tax.”

Note: Re-verified against the live Pub 10 PDF on 2026-07-03. The URL returns HTTP 200 via a browser-UA curl (WebFetch and interactive browsers get a 403 from azdor.gov's edge); use curl to re-fetch. Preceding sentence: 'Federal law repealed the federal state death tax credit (upon which the Arizona estate tax was based) which effectively cancelled the Arizona estate tax.' Corroborated by AZDOR Pub 900 (PUBLICATION_2006_900.pdf): 'For estates of decedents dying after 2004, Arizona no longer imposes an estate tax.'

Arizona flat income tax rate is 2.5% on Arizona taxable income (TY2025)

“Multiply line 8 by 2.5 percent. Enter the result on line 9.”

Note: Applies to all filing statuses (flat rate). Standard deduction $31,500 MFJ (OBBBA-conformed; TF showed stale figure).

Arizona 25% LT capital gain subtraction: any asset acquired after 12/31/2011; no asset-class restriction

“22. An amount of any net long-term capital gain included in federal adjusted gross income for the taxable year that is derived from an investment in an asset acquired after December 31, 2011, as follows: ... (c) For taxable years beginning from and after December 31, 2014, twenty-five percent of the net long-term capital gain included in federal adjusted gross income.”

Note: A.R.S. §43-1022(22)(c): 25% subtraction from Arizona gross income for net long-term capital gain on any asset acquired after December 31, 2011; no asset-class restriction. Pre-2012 assets are excluded; gifted or inherited assets take the transferor's acquisition date.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

AZ taxes out-of-state muni bond interest; AZ-issued bonds exempt by negative implication of ARS §43-1021(3)

“The amount of interest income received on obligations of any state, territory or possession of the United States, or any political subdivision thereof, located outside Arizona that is excluded from gross income under the Internal Revenue Code.”

Note: ARS §43-1021(3) adds back interest on bonds of states OTHER than Arizona. Arizona bonds are exempt by negative implication.

AZ taxes out-of-state muni bond interest; AZ-issued bonds exempt by negative implication of ARS §43-1021(3)

“The amount of interest income received on obligations of any state, territory or possession of the United States, or any political subdivision thereof, located outside Arizona that is excluded from gross income under the Internal Revenue Code.”

Note: ARS §43-1021(3) adds back interest on bonds of states OTHER than Arizona. Arizona bonds are exempt by negative implication.

Arizona conforms to IRC §1400Z-2 QOZ gain deferral and exclusion

“For the purposes of title 43, 'Internal Revenue Code' means the United States Internal Revenue Code of 1986, as amended, in effect on January 1, 2025.”

Note: Arizona IRC conformity date updated to January 1, 2025 (fixed-date); §1400Z-2 incorporated without addback.

Arizona conforms to IRC §1202 QSBS gain exclusion via explicit subtraction

“The amount of any gain excluded from gross income under section 1202 of the internal revenue code.”

Note: ARS §43-1022(36) provides an explicit subtraction for federally excluded QSBS gain under IRC §1202.

Arizona subtraction for U.S. obligation interest requires exemption from state income taxation under federal law; FNMA and FHLMC have no such federal bondholder exemption

“From Arizona gross income subtract interest income on obligations of the United States that are exempt from income taxes under the laws of the United States.”

Note: FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) have no bondholder exemption from state income taxes; the statutory language protects only the corporation. ARS §43-1022(20) requires the obligations be 'exempt from income taxes under the laws of the United States'; FNMA/FHLMC cannot meet this standard. No AZ DOR named-entity ruling found; confidence: medium.

Arizona flat income tax rate is 2.5% on Arizona taxable income (TY2025)

“Multiply line 8 by 2.5 percent. Enter the result on line 9.”

Note: Applies to all filing statuses (flat rate). Standard deduction $31,500 MFJ (OBBBA-conformed; TF showed stale figure).

U.S. Treasury interest exempt from Arizona income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from Arizona income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

Arizona flat income tax rate is 2.5% on Arizona taxable income (TY2025)

“Multiply line 8 by 2.5 percent. Enter the result on line 9.”

Note: Applies to all filing statuses (flat rate). Standard deduction $31,500 MFJ (OBBBA-conformed; TF showed stale figure).

Arizona is a community property state: all property acquired during marriage is community property unless acquired by gift or inheritance (A.R.S. § 25-211)

“All property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is: 1. Acquired by gift, devise or descent.”

Note: Arizona adopted community property law at statehood. A.R.S. § 25-211 is the principal community property statute. Federal income tax treatment: each spouse is taxed on one-half of community income (IRC § 66 for spouses living apart). Arizona follows federal treatment for state income tax purposes.

Arizona part-year return computes the Arizona column from Arizona-source/resident amounts only, recomputing an imported capital-loss carryforward

“In the Arizona column, enter the amount of net gain or (loss) on line 20 only from the following: Any gain or (loss) on property sold while an Arizona resident if you included the amount as income on your 2025 federal return.”

Note: Arizona Form 140PY builds the Arizona column from Arizona-resident/Arizona-source amounts only, so a capital-loss carryforward generated before Arizona residency recomputes in the Arizona column and cannot offset post-residency Arizona gains. Quote is the line 20 (capital gain or loss) instruction, verbatim from the live 2025 140PY instructions PDF (fetched via curl). No published ruling addresses the imported federal section 1212 carryforward directly, so the carryforward application remains a structural inference.