Senate Republicans Pass Historic $1.45 Billion Tax Relief Budget: Delivering Permanent Affordability for Families, Workers and Seniors While Protecting Core Services
FOR IMMEDIATE RELEASE
Monday, May 4, 2026
PHOENIX, ARIZONA—After passing the Legislature this afternoon, Arizona Senate Republicans are sending Governor Hobbs a responsible, balanced FY 2027 budget that spends $800 million less than her proposal while delivering one of the largest tax cuts in state history: $1.45 billion in permanent, broad-based relief over four years.
By fully conforming to President Trump's federal tax cuts, the plan ensures no Arizona taxpayer will need to refile their 2025 taxes. It provides immediate and permanent cost-of-living relief for working families and seniors, including:
No state taxes on tips or overtime pay
A higher standard deduction
Full deduction for child-care expenses
A $25 increase in the dependent tax credit
A $6,000 deduction for seniors age 60+ with retirement or pension income — covering teachers, police officers, firefighters and fixed-income retirees
"This is a serious, disciplined budget that puts Arizona families first," said Senate President Warren Petersen. "We cut taxes, protect essential services, and base every decision on real April revenue projections — not wishful thinking. In divided government, we faced the math, eliminated waste through targeted reforms, and delivered real results without raising taxes or growing government."
The $17.9 billion budget is built on updated April revenue estimates — which showed a $200 million drop in available resources — and relies on no speculative funding, no new taxes or fees, and no inflated projections. It maintains current funding levels for K-12 education and public safety, preserves the voter-protected K-12 State Land Trust for future generations, and limits overall spending growth to 1.9 percent — well below combined population and GDP growth.
To close the shortfall and redirect dollars to taxpayers, Republicans implemented targeted efficiencies that eliminate waste, not services:
Stronger eligibility verification in public assistance programs (AHCCCS and SNAP) to ensure aid reaches only those who truly qualify
5% agency operating reductions (excluding core public safety and child welfare agencies)
Repeal of narrow special-interest tax credits and carve-outs, including solar subsidies
These reforms generate ongoing savings that fund the broad-based tax relief and one-time continuations for priorities such as school facility repairs, child-care subsidies, and foster care support.
Fact check on claims to the contrary: The budget does not cut base pay for troopers or firefighters — it addresses the exploding General Fund subsidy to the Health Insurance Trust Fund through modest premium adjustments for solvency. It makes no changes to current data-center incentives signed by Governor Hobbs in prior budgets. And it redirects every dollar from special-interest provisions into relief for working families and seniors.
Republicans are also once again giving Governor Hobbs and Democrats the opportunity to fund the $4.75 million in emergency Department of Public Safety funding the agency requested. This critical public safety funding is included in the budget — after Governor Hobbs vetoed the standalone bill Republicans sent her and Democrats voted against it on the floor.
"This budget reflects the reality of divided government," said President Petersen. "While Democrats were on the floor today saying we need to raise taxes, we are instead delivering historic tax relief without burdening taxpayers. Your business and your wallet are on the ballot this fall. Vote wisely."
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For more information, contact:
Kim Quintero
Director of Communications | Arizona State Senate Republican Caucus