Plan would adjust tax brackets with inflation.
State Rep. Justin Olson and State Sen. Debbie Lesko want Arizona small business owners to be able to keep more of their own money. One piece of that goal could be achieved soon, now that the House and Senate have passed bills that annually adjust tax brackets for inflation. The issue now goes to the governor.
“Let’s say your salary goes up a little bit more than inflation every year or every other year. If you lived in Arizona, you may start paying higher taxes because it bumped you up into a different bracket,” Lesko says. “What this bill does is it moves along with inflation.”
Olson, who has been pushing for the legislation for several years, says the goal of the bill is to eliminate the hidden tax increase that occurs in inflation.
Lesko says the bills aim to place more money in the hands of taxpayers, which would ultimately boost Arizona’s economy. For small business owners, that means they could buy more equipment and more goods—and hire more workers.
“And those workers will pay income tax, which will again increase revenue. It will help the economy by increasing the number of jobs,” Lesko says. “It’s a pro-taxpayer bill no matter who that taxpayer is, whether it’s a small business owner or an individual.”
Similar legislation was passed two years ago, but was vetoed by then-Gov. Jan Brewer. Instead, a one-time adjustment was passed.
Some other states, including California, already index their income tax brackets to inflation.
How would the income tax bills affect your business? Tell us in the comments section below.
