Tax Expenditure Reports

Arizona Tax Expenditure Reports are studies prepared for the Governor and the Legislature by the Arizona Department of Revenue's Office of Economic Research and Analysis. The reports are prepared in compliance with A.R.S. §42-1005.

Tax expenditures are provisions within the law designed to encourage certain kinds of activity or to aid taxpayers in certain categories. These provisions are generally known as exemptions, exclusions, deductions, subtractions, credits and preferential rates. Such provisions result in a loss of tax revenues, thereby reducing the amount of revenues available for state (and, in some circumstances, local) programs. In effect, the fiscal impact of implementing tax expenditure would be similar to a direct expenditure of state funds. These reports provide a list of tax expenditures and, whenever possible, detail the approximate costs of exempting certain types of income, goods, services or property from its respective tax statutes.

The purpose of these reports is to provide a better understanding of impacts associated with the existing tax exemptions, exclusions, deductions, subtractions and credits. There are sections on every tax imposed in Arizona. Each section contains statutory provisions for that specific tax type. The analysis includes an explanation of the provision as well as the approximate impacts of that provision where possible. Information in sections pertaining to tax types not administered by the Arizona Department is submitted by the agency administering the tax. Any impact estimates presented were provided by that agency.