Bill > HB2850

This bill modifies Arizona's corporate tax law, specifically how businesses allocate and calculate their state taxable income. The legislation makes changes to two key sections of tax code, focusing on business income allocation and the determination of sales location for tax purposes. For taxable years through December 31, 2025, the bill allows businesses to calculate their Arizona income allocation using either a four-factor method (combining property, payroll, and sales factors) or a sales-only method. Starting December 31, 2025, businesses will be required to use the four-factor method. The bill also introduces more detailed and comprehensive rules for determining where sales are considered to have occurred, particularly for services and intangible property. These new rules consider factors like the location of real property, where services are delivered, where loans are secured, and where investment assets are managed. The legislation provides specific guidance for different types of transactions, such as rental of property, interest income, and sales of intangible assets, and includes provisions for multistate service providers to make elections about how their sales are calculated for tax purposes. The changes aim to provide clearer and potentially more equitable methods for businesses to determine their state tax liability.

Budget and Finance

https://apps.azleg.gov/BillStatus/BillOverview/83318