property tax; exemption; widows; widowers

SB1130 - 572R - I Ver

PREFILED��� JAN 09 2026

REFERENCE TITLE:
property tax; exemption; widows; widowers

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1130

Introduced by

Senator
Gowan

AN
ACT

amending section 42-11111, 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 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; veterans with a disability; definitions

A. The property of widows
and widowers, 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
and F
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. The
property of a widow or widower of a deceased first responder who was killed in
the line of duty or who died from injuries suffered in the line of duty is
fully exempt from taxation.

E.
F.
The property of a widow or widower
who does not qualify for a full exemption under subsection C or E of
this section
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.
G.
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
F
, 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
F
, 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
I
,
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.
H.
For the purpose of determining the
amount of the allowable exemption pursuant to subsection
E

F
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.
I.
Pursuant to article IX, section 2,
subsection F, Constitution of Arizona, to qualify for
this

an
exemption
under subsection C, D or F of
this section
, 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.
J.
For the purposes of subsection
H
I
of this section, "income
from all sources" means the sum of the following, excluding the items
listed in subsection
J

K
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

K
of this
section.

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

J.
K.
Notwithstanding subsection
I

J
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.
L.
A widow or widower, 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
, if necessary,
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

I
of this section.

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

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

N.
O.
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. "First responder":

(
a
) Means
either of the following:

(
i
) a law
enforcement officer.

(
ii
) a
firefighter.

(
iii
) A
paramedic as defined in section 36-2201.

(
b
) includes a
person who is a volunteer first responder and who is operating in an official
capacity on behalf of a government entity that is involved in an emergency or
law enforcement response.

3.
4.
"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.
5.
"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.
6.
"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. 2.
Applicability

This act applies to tax years
beginning from and after December 31, 2025.