Senate Finance Committee Advances Bill to Make Selling Your Home Less Costly
FOR IMMEDIATE RELEASE
Monday, February 9, 2026
PHOENIX, ARIZONA— Senate Republicans are advancing legislation to remove Arizona's state income tax on capital gains from the sale of a primary residence, a change aimed at protecting families and seniors who are selling the home they lived in and paid into for years.
The Senate Finance Committee today approved SB 1633, sponsored by Chairman J.D. Mesnard, which ensures Arizona does not impose a tax penalty on long-term homeowners when they sell their primary residence and move to their next stage of life.
Under current law, families who sell their home can face a state tax bill on the equity they built over decades. That burden can discourage people from downsizing, relocating for work, or making housing decisions that better fit their financial and family needs. It also ignores the reality that many homeowners will pay hundreds of thousands of dollars in interest over the life of their mortgage before ever seeing the equity. SB 1633 addresses that problem by treating a family home as a place to live — not a taxable investment. By removing this tax penalty, SB 1633 also helps free up existing homes, encouraging more movement in the housing market and easing pressure on Arizona's housing shortage.
"Taxing gains on a primary residence can trap people in homes that no longer work for them," said Senator Mesnard. "Seniors may delay downsizing. Families may stay in houses that are too large, too small, or too far from work. Workers may think twice about relocating for a better opportunity. By removing this tax barrier, SB 1633 allows families to make decisions based on real life needs, not fear of a tax hit. When someone sells their home, the state should not take a cut of the equity they worked years to build."
The bill applies to homeowners who have lived in the property as their primary residence for at least five years, ensuring the tax relief is focused on long-term, owner-occupied homes rather than short-term speculation. The change would take effect beginning with the 2027 tax year, giving families certainty as they plan major housing and financial decisions.
SB 1633 now moves forward in the legislative process as Senate Republicans continue advancing policies that reduce the tax burden on Arizona families, seniors, and working households.
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For more information, contact:
Kim Quintero
Director of Communications | Arizona State Senate Republican Caucus