AZ Taxpayers are Torn Between Two Lovers

Several states continue to convene their legislatures to decide if they will follow the new tax laws in the One Big Beautiful Bill (OB3) for 2025 or do something else. Already, NC has decided to kick the can till after tax season before deciding, which means possible amended returns in play.

AZ is a different song and dance. The Governor (a Democrat) wrote an Executive Order to follow OB3 for 2025, but the legislature (controlled by Republicans) passed a bill to postpone adoption of OB3 till 2026. The Governor vetoed it.

Under AZ law, an Executive Order prevails until the legislative body decides. And they could decide differently. So, the Governor and the Legislature have caught AZ taxpayers in a love triangle as the song goes. Oddly, this is a Democrat governor wanting to adopt a Trump tax cut that most Democrats loath, while the Republican legislature wants to delay it? Sounds like a messy relationship. 😊

So, what does this mean? AZ taxpayers can deduct OT, tips, and car loan interest for now, but if the legislature prevails, they may have to amend their returns.

This is how we are approaching the dilemma: It is highly unlikely that the deduction will be rescinded. If that does happen, it will require amended returns paying BACK the benefit. We are keeping a list of clients who would be subject to that just in case.