How will H.R. 1 affect Arizona’s Budget?
$67 M Balance is insufficient to address $1.1 B of H.R. 1 Tax Impacts
Points below come from our partners at the Arizona Food Bank Network and Arizona Food Systems Network.
Arizona conforms a portion of its state income tax to the federal forms.
H.R. 1, the federal budget legislation of this summer, made numerous changes to federal income tax laws effective as of January 2025.
The state has the choice of how many H.R. 1 federal tax provisions to incorporate into state law.
If we conform to all federal changes, the projected General Fund revenue loss is $(438) M in FY 26, $(336) M in FY 27 and $(372) M in FY 28.
The fiscal impact may change depending on the results of Department of Revenue statistical model runs.
Budget Watch Key Points (October 2025)
The projected cash balance is positive in each year after accounting for statutory funding formula growth.
The lowest ending balance in the 3-year budget projection determines the dollars available for discretionary purposes.
The lowest ending balance is $67 M in FY 28.
Fiscal Highlights (November 2025)
October 2025 General Fund revenue collections totaled $1.44 billion, which was an increase of 9.9% above October 2024.
Corporate Income Tax (CIT) revenue collections were double the amount collected in the prior year and significantly exceeded the amount received during any previous October.
Surprising growth” = unreliable
October Sales Tax collection sluggish and posted a forecast loss of $(19) million.
Individual Income Tax (IIT) grew by 11.5% compare to last year, resulting in a forecast gain of $27 million.
October revenue gains and the state's current year-to-date performance, this new information could raise the projected FY 2026 revenue and subsequent years.
SNAP: Able-Bodied Adult without Dependents (AWAWD) Work Requirements (WR) are in effect!
Beginning November 1, 2025, individuals in Arizona who are 18 through 65 years of age, without minor dependents under the age of 15, and physically and mentally fit for work can only receive SNAP for 3 months in a 36-month period, unless they can demonstrate that they are meeting work requirements (see DES webpage below) OR qualify for an exemption. Individuals residing on federally recognized tribal reservations within Arizona are exempt from these requirements.
Due to the historic SNAP disruption in November, FNS will not be enforcing WR in November and will not be counting the month toward error rates for states.
SNAP: What’s happening now?
Arizona Attorney General Kris Mayes joined the multistate lawsuit that led to the temporary injunction against the federal data request.
USDA/Current administration is now threatening to withhold SNAP benefits to states that do not realize immigration data.
SNAP ABAWD waivers have officially expired, new requirements kicking in nationally.
USDA announced immigrant/asylee guidance on 10/31/2025
Will impact families at recertification or initial application.