Arizona Lawmakers Propose Tax Reductions for Retirees
Arizona is on the cusp of a significant legislative shift as a new bill aims to ease the tax burden on retirees’ income, such as 401(k)s and IRAs. The proposal, introduced by Sen. JD Mesnard, seeks to alleviate financial pressures on seniors by reducing their income tax obligations.
This legislative initiative, however, faces opposition from several municipalities within the state. The concern among these municipalities is the potential loss of income tax revenue, should the bill be enacted.
Sen. Mesnard, who has garnered support for the bill during meetings with various groups, including the Sun Lakes Republican Club, explained, “Whenever I’ve talked about it at my district meetings, or at the Sun Lakes Republican club meetings, they really like the idea.”
Initially, Mesnard’s proposal was more expansive, aiming to eliminate taxes on all retirement income. However, due to the estimated financial impact of approximately $900 million, which would significantly affect the state’s general fund, he has revised his approach.
The current version of the bill targets only individuals aged 67 and above, rather than the previous threshold of 59.5. Additionally, it does not propose a complete abolition of the income tax.
Arizona already stands out as one of the few states that does not levy taxes on Social Security benefits. “Arizonans deserve to keep more of what they earn so they can plan for retirement at an appropriate age. This bill allows retirees to enjoy their responsible savings while securing a comfortable and stable life in their golden years, free from unnecessary financial burdens,” Mesnard stated.
The bill has progressed along party lines, with Democrats expressing reservations. Sen. Mitzi Epstein voiced her opposition during a Senate Finance Committee meeting, stating, “This committee should be renamed the More Money You Have, the More Tax Breaks You Get Committee.”
Governor Katie Hobbs’ office has remained silent on the proposal, with a spokesperson for the Democratic governor declining to comment.
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