property tax; exemption; veterans

HB2230 - 572R - I Ver

REFERENCE TITLE:
property tax; exemption; veterans

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2230

Introduced by

Representative
Blackman

AN
ACT

amending section 13-2414, Arizona
Revised Statutes; amending title 42, chapter 11, article 2, Arizona Revised
Statutes, by adding section 42-11055; amending section 42-11111,
Arizona Revised Statutes; amending title 42, chapter 11, article 3, Arizona
Revised Statutes, by adding section 42-11111.01; amending sections 42-11152
and 42-11153, Arizona Revised Statutes; relating to property tax.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 13-2414, Arizona Revised
Statutes, is amended to read:

START_STATUTE
13-2414.

Impersonating a veteran; classification; definitions

A. A person commits impersonating a veteran of the
United States armed forces if the person knowingly misrepresents
themselves
himself
to be a veteran and engages in any of the following
conduct with the intent to obtain money, property or any tangible benefit:

1. The person
knowingly
misrepresents
themselves
himself

to be a veteran of any branch of the uniformed services of the United States
without having served in that branch as an enlisted service member, warrant
officer or commissioned officer.

2. The person knowingly misrepresents
themselves
himself
to be a recipient of a decoration, medal, badge or tab
that was not lawfully earned through military service.

3. The person knowingly misrepresents
themselves
himself
to have graduated from a military school from which
the person did not graduate or to have obtained a rating or military
occupational specialty that the person did not obtain.

4. The person falsely claims attendance at any of
the following academies or schools:

(a)
The
United States military
academy.

(b)
The
United States naval
academy.

(c)
The
United States air
force academy.

(d)
The
United States coast
guard academy.

(e)
The
United States merchant
marine academy.

(f)
The
United States marine
corps and United States army
sergeant majors

sergeants major
academy.

(g)
The
United States air
force
chiefs

chief leadership
course.

(h)
The
United States navy
senior enlisted academy.

(i) All other military branch schools that produce
an additional skills identifier qualification, including ranger, seal, recon or
special forces.

5. The person knowingly misrepresents
themselves
himself
to be a combat veteran.

6. The person falsifies or alters military documents
or records.

7. The person knowingly misrepresents
themselves
to have
himself as having
received a
characterization of discharge that the person did not receive.

8. The person knowingly misrepresents
themselves
himself
to be a veteran pursuant to this subsection in the
furtherance of a campaign for political office.

9. The person knowingly misrepresents
or falsifies a disability rating from the United States department of veterans
affairs for the purposes of receiving a property tax exemption under section 42-11111.01.

B. Certified separation documents from the
applicable uniformed service or the national archives and
record

records
administration that support the person's claims
constitute a complete defense to prosecution. Before filing a
complaint or seeking an indictment, a prosecuting agency shall obtain from the
applicable uniformed service or the national archives and
record

records
administration a certified copy of the person's
separation documents or shall receive notice that such documents do not exist.

C. This section does not apply to actors or
actresses who play a veteran in conjunction with a role in a production
intended for entertainment or to individuals experiencing homelessness.

D. Impersonating a veteran is a class 1 misdemeanor,
except that impersonating a veteran is a class 6 felony if
either
of the following applies:

1.
The benefit obtained has a
value of at least $50,000.

2. The benefit obtained is the
property tax exemption allowed under section 42-11111.01.

E. If a person is convicted of a class 6 felony
pursuant to this section, section 13-604 does not apply.

F. For the purposes of this section:

1. "Combat veteran" means a current or
former member of the uniformed services who served in a location where the
receipt of imminent danger pay or hostile fire pay was authorized.

2. "Tangible benefit" means financial
remuneration, an effect on the outcome of a criminal or civil court proceeding,
or any benefit relating to service in the military that is provided by a
federal, state or local governmental entity.
END_STATUTE

Sec. 2. Title 42, chapter 11, article 2,
Arizona Revised Statutes, is amended by adding section 42-11055, to read:

START_STATUTE
42-11055.

Property tax exemption reimbursement; appropriation notice

A. On or before November 1 of each
year, the county assessor shall report to the department the total dollar
amount of exemptions granted under section 42-11111.01 for the prior tax
year and the amount of foregone revenue to the county and each school district
and fire district located within the county.

b. The department shall determine the
amount of forgone revenue to each county, school district and fire district in
this state and notify the state treasurer of those amounts.

C. An amount equal to the amount
determined pursuant to subsection B of this section is appropriated each fiscal
year from the state general fund to the state treasurer for the purposes of
reimbursing counties, school districts and fire districts for the foregone
revenue resulting from the property tax exemption allowed under section 42-11111.01.

D. On notification from the
department, the state treasurer shall distribute monies appropriated pursuant
to subsection C of this section to the appropriate county, school district and
fire district in the following amounts:

1. TO each school district and fire
district, one hundred percent of the amount of foregone revenue.�

2. To each county, fifty percent of
the amount of foregone revenue.
END_STATUTE

Sec. 3. Section 42-11111, Arizona Revised
Statutes, is amended to read:

START_STATUTE
42-11111.

Exemption for property; widows and widowers; persons with a total
and permanent disability; definitions

A. The property of widows
and widowers
,

and
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
property 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 property is eligible for the exemption under this subsection
may continue to claim the full exemption as long as the surviving spouse uses
the property as the surviving spouse's primary residence and the surviving
spouse does not remarry.

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.
C.
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.
D.
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
C
, 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
C
, 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
F
,
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.
E.
For the purpose of determining the
amount of the allowable exemption pursuant to subsection
E
C
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.
F.
Pursuant to article IX, section 2,
subsection F, Constitution of Arizona, to qualify for this exemption, 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.
G.
For the purposes of subsection
H
F
of this section, "income
from all sources" means the sum of the following, excluding the items
listed in subsection
J
H
of
this section:

1. Adjusted gross income
as defined by the department.

2. The amount of capital
gains excluded from adjusted gross income.

3. Nontaxable strike
benefits.

4. Nontaxable interest
that is received from the federal government or any of its instrumentalities.

5. Payments that are
received from a retirement program and paid by:

(a) This state or any of
its political subdivisions.

(b) The United States
through any of its agencies, instrumentalities or programs, except as provided
in subsection
J

H
of this
section.

6. The gross amount of any
pension or annuity that is not otherwise exempted.

J.
H.
Notwithstanding subsection
I
G
of this section, income from all
sources does not include monies received from:

1. Cash public assistance
and relief.

2. Railroad retirement
benefits.

3. Payments under the
federal social security act (49 Stat. 620).

4. Payments under the
unemployment insurance laws of this state.

5. Payments from any
veterans pensions.

6. Workers' compensation
payments.

7. Loss of time insurance.

8. Gifts from
nongovernmental sources, surplus foods or other relief in kind supplied by a
governmental agency.

K.
I.
A widow or widower
,

or
a person with a total and permanent disability
or a veteran with a disability
shall establish eligibility for
exemption under this section by filing an affidavit with the county assessor
under section 42-11152 when initially claiming the exemption.� Each year
thereafter, the person or the person's representative shall annually calculate
income from the preceding year to ensure that the person still qualifies for
the exemption and notify the county assessor in writing of any event that
disqualifies the person from further exemption.� Regardless of whether the
person or representative notifies the assessor as required by this subsection,
the property is subject to tax as provided by law from the date of
disqualification, including interest, penalties and proceedings for tax
delinquencies.� Disqualifying events include:

1.
Except as provided in subsection C
of this section,
The person's death.

2. The remarriage of a widow or widower.

3. The person's income from all sources exceeding
the limits prescribed by subsection
H

F
of this section.

4. The conveyance of title to the property to
another owner.

L.
J.
Any
dollar amount of exemption that is unused in a tax year against the limited
property value of property and improvements owned by the individual may be
applied for the tax year against the value of personal property subject to
special property taxes, including the taxes collected pursuant to title 5,
chapter 3, article 3 and title 28, chapter 16, article 3.

M.
K.
An
individual is not entitled to property tax exemptions under more than one
category as a widow or widower, a person with a total and permanent disability
or a veteran with a disability
pursuant to section 42-11111.01

even if the individual is eligible for an exemption in more than one
category.

N.
L.
For
the purposes of this section:

1. "Competent medical authority" means any
of the following:

(a) An individual licensed under title 32, chapter
8, 13, 14, 17, 19.1, 25 or 29 or a comparable law of another state.

(b) A registered nurse practitioner as defined in
section 32-1601.

(c) The United States department of veterans
affairs, as evidenced by a disability award letter.

2. "Federal house price index" means the
average measure of movement of single-family house prices in the United
States published by the federal housing finance agency, or its successor, for
this state.

3. "GDP price deflator" means the average
of the four implicit price deflators for the gross domestic product reported by
the United States department of commerce or its successor for the four quarters
of the state fiscal year.

4. "Person with a total and permanent
disability" means a person who is unable to engage in any substantial
gainful activity, for pay or profit, by reason of any physical or mental
impairment that is expected to last for a continuous period of at least twelve
months or result in death within twelve months as certified by a competent
medical authority.

5. "Veteran" means an
individual who has served in, and been discharged, separated or released under
honorable conditions from, active or inactive service in the uniformed services
of the United States, including:

(a) All regular, reserve and national
guard components of the United States army, navy, air force, marine corps and
coast guard.

(b) The commissioned corps of the
national oceanic and atmospheric administration.

(c) The commissioned corps of the
United States public health service.

(d) A nurse in the service of the
American red cross or in the army and navy nurse corps.

(e) Any other civilian service that is
authorized by federal law to be considered active military duty for the purpose
of laws administered by the United States secretary of veterans affairs.
END_STATUTE

Sec. 4. Title 42, chapter 11, article 3,
Arizona Revised Statutes, is amended by adding section 42-11111.01, to read:

START_STATUTE
42-11111.01.

Exemption for primary residence; veterans with disabilities;
definitions

A. The
primary residence of a veteran with a service-connected disability who is
a resident of this state is exempt from taxation as provided by article IX,
section 2, subsection F, Constitution of Arizona, and subject to the conditions
and limits prescribed by this section.

B. Subject
to subsection C of this section, the amount of the exemption is:

1. For a
veteran whose disability rating is ninety percent or more, one hundred percent
of the property tax liability.

2. For a
veteran whose disability rating is seventy percent or more but less than ninety
percent, seventy-five percent of the property tax liability.

3. For a veteran whose disability rating is fifty percent
or more but less than seventy percent, fifty percent of the property tax
liability.

4. For a veteran whose disability rating is thirty percent
or more but less than fifty percent, thirty-five percent of the property
tax liability.

5. For a
veteran whose disability rating is ten percent or more but less than thirty
percent, twenty percent of the property tax liability.

6. For a
veteran whose disability rating is less than ten percent, ten percent of the
property tax liability.

C. The
exemption amount prescribed in subsection B of this section is limited as
follows:

1. For the
first tax year claimed, twenty-five percent of the amount allowed.

2. For the
second tax year claimed, fifty percent of the amount allowed.

3. For the
third tax year claimed, seventy-five percent of the amount allowed.

4. For the
fourth tax year claimed and each tax year thereafter, the full amount allowed.

D. The
surviving spouse of a veteran whose primary residence is eligible for the
exemption under this section may continue to claim the exemption in the amount
the veteran received at the veteran's time of death as long as the surviving
spouse uses the property as the surviving spouse's primary residence and the
surviving spouse does not remarry.

E. A
veteran with a disability shall establish eligibility for exemption under this
section by filing an affidavit with the county assessor under section 42-11152
when initially claiming the exemption. On request from the county assessor, the
department of veterans' services shall verify disability ratings with the
United States department of veterans affairs. The person or the person's
representative shall notify the county assessor in writing of any event that
disqualifies the person from the exemption. �Regardless of whether the person
or representative

notifies the assessor as required by
this subsection, the property is subject to tax as provided by law from the
date of disqualification, including interest, penalties and proceedings for tax
delinquencies.� Disqualifying events include:

1.
Except as
provided in subsection D of this section, the person's death.

2. The primary residence is conveyed
to a new owner.

3. The property is no longer the
veteran's primary residence.

4. The death or remarriage of the
veteran's surviving spouse.

5. The veteran receives a disability
rating reduction from the United States department of veterans affairs. A
veteran that receives a disability rating reduction may reestablish eligibility
for exemption under this section by filing a new affidavit with the county
assessor based on the veteran's new disability rating.

F. A property tax appeal or review
under chapter 16 of this title resulting from denial of the exemption under
this section shall be expedited.

G. An individual is not entitled to
property tax exemptions under more than one category as a widow or widower or a
person with a total and permanent disability pursuant to section 42-11111
or a veteran with a disability pursuant to this section even if the individual
is eligible for an exemption in more than one category.

H. On or before November 1 of each
year, the county assessor shall report to the department the total dollar
amount of exemptions granted under this section for the prior tax year and the
revenue impact to the county and the school districts and fire districts
located within the county.

I. For the purposes of this section:

1. "disability rating"
means a disability rating by the United States department of veterans affairs.

2. "Primary
residence":

(
a
) Means a single-
family home,
condominium, manufactured home or mobile home where the veteran resides for the
majority of the year.

(
b
) Includes the parcel of land on which the dwelling is
located up to one acre.

3. "property
tax liability" means the total tax owed after assessment ratios and tax
rates are applied.

4. "Veteran" means an
individual who has served in, and been discharged, separated or released under
honorable conditions from, active or inactive service in the uniformed services
of the United States, including:

(
a
) All
regular, reserve and national guard components of the United States army, navy,
air force, marine corps, space force and coast guard.

(
b
) The
commissioned corps of the national oceanic and atmospheric administration.

(
c
) The
commissioned corps of the United States public health service.

(
d
) A nurse in
the service of the American red cross or in the army and navy nurse corps.

(
e
) Any other civilian service that is authorized by federal
law to be considered active military duty for the purpose of laws administered
by the United States secretary of veterans affairs.
END_STATUTE

Sec. 5. Section 42-11152, Arizona Revised Statutes, is amended to read:

START_STATUTE
42-11152.

Affidavit; electronic submission; acknowledgment of receipt;
false statements

A. Except
for property described in sections 42-11125 and 42-11127, a person
who claims exemption from taxation under article IX, section 2, Constitution of
Arizona, shall:

1. When initially claiming
the exemption, file an affidavit with the county assessor, signed under penalty
of perjury, as to the person's eligibility.

2. Fully answer all
questions on the eligibility form or otherwise required by the assessor for
that purpose.

3. Notify the county
assessor in writing if all or part of the property is conveyed to a new owner,
the property is no longer used for the purpose that qualifies the property for
the exemption or there is any event that otherwise disqualifies the person or
property from the

B. At the assessor's
discretion, the assessor may require additional proof of the facts stated by
the person before allowing an exemption.

C. The county assessor may
accept affidavits required by this section electronically. If the
county assessor accepts electronic affidavits, the county assessor shall
provide an electronic acknowledgment of receipt to the person who submitted the
affidavit.

D. For
affidavits for the exemption under section 42-11111.01, the county
assessor shall accept electronic disability documentation obtained from the
United States department of veterans affairs, including the department's
website.

D.
E.
A
false statement that is made in the affidavit is perjury.
END_STATUTE

Sec. 6. Section 42-11153, Arizona Revised
Statutes, is amended to read:

START_STATUTE
42-11153.

Deadline for filing affidavit

A. A failure by a taxpayer who is entitled to an
exemption to
make

file
an
initial
affidavit as required by section 42-11152
, subsection A, paragraph 1
or furnish evidence required by
this article between the first Monday in January and March 1 of the year
constitutes a waiver of the exemption.

B. If a widow or widower or a person with a
disability whose property is exempt from tax under section 42-11111,
a veteran with a service-connected disability whose property is
exempt from tax under section 42-11111.01
or an organization that
is exempt from federal income tax under section 501(c) of the internal revenue
code and is exempt from property tax under article 3 of this chapter, submits a
petition after the deadlines prescribed by subsection A of this section,
the person or organization may have the waiver redeemed by the county board of
supervisors at any regular meeting, except that taxes that were due and payable
before the petition was submitted may not be refunded or abated.
END_STATUTE

Sec. 7.
Legislative findings

The
legislature finds that:

1. Arizona
is home to more than five hundred thousand veterans, including thousands of
veterans with service-connected disabilities incurred while defending the
United States.

2. Arizona's
current property tax relief structure is outdated, income restricted and
administratively inconsistent and fails to recognize the financial hardships
imposed by service-connected disabilities.

3. Numerous
states, including Texas, Florida, Alabama and South Carolina, have adopted
modern disability-based property tax exemptions without income limits.

4. The
reforms provided in this act will:

(a) Provide
meaningful property tax relief for veterans with service-connected
disabilities.

(b) Modernize
and simplify the property tax exemption process for veterans with service-connected
disabilities.

(c) Protect
school districts, fire districts and counties through a responsible
reimbursement framework.

(d) Phase
in the exemption over four years to maintain fiscal stability.

(e) Protect
surviving spouses.

(f) Reduce
administrative burdens on veterans who are permanently and totally disabled.

(g) Strengthen
enforcement through alignment with the Master Sergeant Orlando Dona Valor Act.

Sec. 8.
Applicability

This act applies to tax years
beginning from and after December 31, 2026.