EDITOR’S NOTE: Within hours of passage, Gov. Hobbs vetoed the bill. It looks like we are poised for another year of record vetoes! Congressman Andy Biggs (R-CD5) issued a statement:

“Arizonans of all backgrounds are being denied meaningful economic relief because of Katie Hobbs, who decided to veto a $1.1 billion tax cut for seniors, families, and workers. This veto is just the latest example of a weak and ineffective governor holding Arizona back from its full potential because she has no vision for our state and no ability to lead. I worked with President Trump to pass these tax cuts at the federal level, while Arizona House and Senate Republicans immediately got to work and passed them at the state level during the first of week of the legislative session. Republicans are united in working to ease the tax burden on all Arizonans while Katie Hobbs isn’t working for anyone.”

Arizona Republicans moved quickly on one of the first major bills of the 2026 session, sending Senate Bill 1106 to Gov. Katie Hobbs and setting up an early veto showdown over what GOP leaders are branding as broad-based tax relief.

SB1106 cleared both chambers on January 15, 2026, and was transmitted to the governor the same day. Republican leaders argue the bill must be enacted immediately to avoid confusion for taxpayers and preparers as Arizonans begin filing 2025 returns this spring. Hobbs has criticized the package as an expensive plan with unclear offsets and has signaled she prefers a narrower approach.

SB 1106 is paired with a House companion bill, HB 2153, sponsored by Sen. J.D. Mesnard (R-13), chairman of the Senate Finance Committee, and Rep. Justin Olson (R-10), chairman of the House Ways & Means Committee.

In a joint press release, Arizona Republicans said the package is designed to align Arizona’s tax code with federal tax reforms tied to President Donald Trump’s “One Big Beautiful Bill,” which they claim will deliver Arizonans an estimated $1.1 billion in tax savings over the next three years. They framed the plan as an affordability package focused on working families and an urgent fix for tax-season uncertainty.

According to the release, SB1106 is a “tax conformity” bill—a technical but consequential update that aligns Arizona tax law with federal law. The bill updates Arizona’s reference to the Internal Revenue Code as of January 1, 2026. It applies the changes retroactively to January 1, 2025, meaning it is intended to affect the 2025 tax year currently being filed.

“This legislature has a strong record of cutting taxes and lowering costs for Arizona families,” Mesnard said, pointing to past tax reductions and arguing the 2026 plan builds on that record with additional relief aimed at families.

Senate President Warren Petersen emphasized urgency, saying tax professionals and families need clear guidance now and urging Hobbs to sign what Republicans described as a “historic tax cut” as soon as it reaches her desk.

House Speaker Steve Montenegro (R-29) also criticized Hobbs’ recent tax-related actions, arguing the governor “jumped ahead of the law” by issuing state tax guidance that assumes legislative action and that her executive order has compounded confusion. “This kind of unilateral overreach undermines the process and leaves families, tax preparers, and businesses stuck in the middle,” Montenegro said.

Olson said the plan applies Trump-era tax cuts to Arizona’s tax code and targets relief to “working families, seniors on fixed incomes, and small businesses,” adding that it aligns with Trump’s policy promises, such as no tax on tips or overtime, which Republicans say are reflected in the Arizona package.

Arizona legislative budget staff estimate that SB1106 would reduce General Fund income tax revenue by $441.3 million in FY 2026, with additional reductions in subsequent years. Analysts also project a hit to cities and towns through revenue sharing, including an estimated $79.4 million decrease in FY 2028.

Republicans, meanwhile, point to their broader estimate of $1.1 billion in tax savings over three years and argue the plan is necessary to help families keep more of what they earn as the Trump administration works to reverse what they describe as economic damage from the Biden-Harris years.

Tax conformity bills are often treated as routine cleanup. This year, SB1106 has become a flashpoint: Republicans are pushing for speed, affordability, and filing-season certainty; Hobbs and Democrats are expected to frame the package as too costly and too broad, lacking explicit budget offsets.

Because SB1106 is retroactive to the 2025 tax year, timing matters. A veto, followed by a pivot to a narrower conformity-only bill or a negotiated compromise, could leave taxpayers and preparers in limbo, increasing the likelihood of amended returns depending on when and how the final policy lands.