Some Arizona lawmakers want to lower taxes on retirement income like 401(k)s.
A bill sponsored by Sen. J.D. Mesnard (R-Chandler) would lower the amount of income tax that seniors have to pay on 401(k) and IRA income.
The bill is opposed by several Arizona municipalities, which would lose out on income tax revenue if the bill is signed into law.
“Whenever I’ve talked about it at my district meetings, or at the Sun Lakes Republican club meetings, they really like the idea,” Mesnard said.
Initially, his bill would have banned tax on all retirement income, but he said the price tag on that version of the bill was too high, at around $900 million, and would be a huge hit to the state’s general fund. So, he amended the bill.
Now, the bill would apply only to seniors 67 and above instead of 59.5 and above, and it wouldn’t completely abolish the income tax.
Arizona is already one of just a few states that do not tax Social Security income.
“Arizonans deserve to keep more of what they earn so they can plan for retirement at an appropriate age. This bill allows retirees to enjoy their responsible savings while securing a comfortable and stable life in their golden years, free from unnecessary financial burdens," Mesnard said in a statement.
So far, the measure has advanced on party lines.
Mesnard said the Democrats aren’t supporting anything that cuts down on state revenue.
“This committee should be renamed the More Money You Have, the More Tax Breaks You Get Committee,” Sen. Mitzi Epstein (D-Tempe) said in the Senate Finance Committee before voting ‘no’ on the bill.
A spokesperson for Democratic Gov. Katie Hobbs declined to comment on the bill.
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