Arizona changes tax code to match US steps on COVID relief

PHOENIX (AP) — Legislation approved with bipartisan support among state lawmakers and signed into law by Republican Gov. Doug Ducey conforms Arizona’s tax code to federal income tax changes that include steps providing pandemic relief.

The bill signed late Wednesday by Ducey was approved unanimously by the House on Tuesday and the Senate on Wednesday.

Ducey said in a statement that the legislation includes changes that the federal government made to help taxpayers and businesses navigate the COVID-19 pandemic.

The state’s conforming changes include exempting federal Paycheck Protection Program loans from state income tax and providing a state income tax exemption for the first $10,000 in unemployment insurance benefits received in 2020, Ducey’s office said in a statement.

State conformity with federal changes is important in part because the state’s computation of individual income taxes starts with calculations of taxpayers’ federal adjusted gross income.

Ducey earlier this month signed into law separate legislation delaying the state’s tax-filing deadline until May 17 to match a delay for federal tax returns.