Arizona committee backs exemption for locally assessed business personal property tax

The House Ways and Means Committee returned House Bill 2389 with a due-pass recommendation Wednesday after hearing testimony from business owners, local officials and policy groups. The bill, sponsored by Representative Carter, would exempt locally assessed business personal property from property taxation beginning Jan. 1, 2026.

Supporters said the tax is administratively burdensome and yields little net revenue. "The business personal property tax is sort of a backwater a lot of people aren't aware of," Representative Carter said, calling the tax "burdensome to administer" and noting that small businesses face high compliance costs when they must inventory depreciating items such as tables and chairs.

Small-business owners who testified said the notices and valuation process were sudden and confusing. Mahmood Moyuddin, who identified himself as owner of the Hitching Post near Apache Junction, said his restaurant had been billed unexpectedly and that county notices sometimes arrived without prior contact: "We never ever received the letter from the county to provide the equipment list or value of the equipment. Never ever received it," he told the committee.

Daryl Cross, an Apache Junction city councilman, described instances where businesses received duplicate tax bills and where depreciating items continued to be taxed in ways owners found unclear. "We're getting two tax bills," Cross said. "They're actually getting the school tax and the property tax twice on the same items." County officials testified the tax represents a small portion of the overall property tax base and that existing exemptions and depreciation rules already reduce liability for many small businesses.

Mark Barnes of the County Supervisors Association said counties are still evaluating the bill and its budgetary effects but noted recent statutory changes already reduce taxable values for some personal property. "Personal property tax is gonna be a very, very small portion of the overall property tax base for any county," Barnes said. The committee adopted a sponsor amendment to ensure the measure applies only to locally assessed property and not to centrally valued property.

After debate and the Carter amendment's adoption, the committee voted 5–4 to return the bill with a due-pass recommendation.

The bill now moves to further floor consideration, where any final changes to implementation dates or fiscal offsets could be addressed.