Tax cut plus fixes to income taxes and unemployment insurance to put more money in owners' pockets.
Small business owners in Arizona are in for some tax relief, thanks to three changes made during the recent legislative session.
“Bracket creep” has plagued the state for years, NFIB/Arizona State Director Farrell Quinlan said. But under new legislation, the state’s income tax rates are now indexed to inflation, meaning taxpayers will no longer see their taxes increase after “bracket creep” pushes them into a higher bracket. This change should save taxpayers $6 million, the Arizona Republic reported.
“This will help small businesses since their employees will not be burdened by being taxed in a higher tax bracket,” Quinlan said.
To go along with that, Arizona Gov. Doug Ducey turned a $30 million surplus in this year’s budget into a tax cut for businesses that use a lot of equipment or machinery, by conforming to IRS Code Section 179 expensing and bonus depreciation provisions in Arizona’s tax code for 2014.
Ducey also signed a repeal of the regressive 0.1 percent tax on unemployment insurance premiums paid by private sector employers, a long-sought goal for Arizona small business owners. The tax collected $7 per employee per year to fund job training programs most often used by Fortune 500 companies and rarely used by small businesses, which contributed most to the fund annually. But this shift could save as much as $13 million annually.
While these are not grand changes to Arizona’s tax climate, they do bode well for small businesses, according to Quinlan. Ducey made a promise not to raise taxes, and even though he’s faced intense pressure to do so, he’s kept his word. That could mean more pro-business changes in the future, Quinlan said.
“It’s something when a politician keeps their promise, but to have them go one step further and actually cut taxes when they promised not to raise them, it’s good news,” Quinlan said. “We have a tax system that’s a little more fair for small businesses, so were hoping we can start making more fundamental changes to taxes.”
