Bill > SB1371

This bill modifies Arizona's income tax law to provide additional tax deductions for retirement-related distributions and contributions for taxpayers who are 67 years old or older. Specifically, the bill allows individuals 67 and older to subtract distributions from pensions and retirement accounts from their Arizona gross income, with some important restrictions. A "pension" is defined as either a defined benefit plan paid to an individual or periodic retirement payments from government or private employers. "Retirement accounts" include qualified retirement plans like 401(k)s, 403(b)s, 457 plans, and individual retirement accounts (IRAs). The total amount that can be subtracted under these new provisions cannot exceed the optional standard deduction, which is adjusted for inflation. Additionally, the bill allows taxpayers to subtract contributions to individual retirement accounts (IRAs) that were not previously deducted in federal adjusted gross income, also subject to the same total deduction limit. These changes will apply to taxable years beginning after December 31, 2024, providing a new tax benefit for older Arizona residents to reduce their state income tax burden on retirement income and retirement account contributions.