It took until May 27, 2019, but Arizona made some significant changes for the 2019 tax year to conform to the Tax Cuts and Jobs Act (TCJA). Outlined are the major changes impacting individuals and businesses.
Adjustments for individuals will include the following:
- The standard deduction will match the Federal standard deduction for 2019 ($12,200 single/married filing separate, $18,350 head of household, $24,400 married filing joint).
- Removal of the personal and dependent exemption amounts.
- There will now be a $100 child tax credit per dependent under 17 years of age and $25 for dependents 17 and older. The credit is phased out for federal adjusted gross income greater than $200,000 single/married filing separate and head of household and $400,000 married filing joint.
- You will be able to increase your standard deduction by 25% of the charitable donations that would have been claimed as an itemized deduction.
- Reduced the number of tax brackets from five to four, with an overall reduction in the rates, so many individual taxpayers will see a small drop in their 2019 tax rates.
Many previous items will stay the same, including last year’s tax credits for qualifying charitable organizations, qualifying foster care organizations, and certified school tuition organization.
For 2019, there are a few additional information reporting requirements in order to take the tuition credit. It is important to note that many qualified foster care charitable organizations (QFCO) are going through a recertification process for 2019, and not all 2018 certified QFCO’s may be certified for 2019.
Changes for businesses will include the following:
- As a result of the 2018 ruling by the US Supreme Court in South Dakota v. Wayfair, Arizona legislation was signed into law on May 31, 2019 that now requires remote sellers and marketplace facilitators that had not previously been collecting and remitting transaction privilege tax under current law to begin filing and paying TPT in Arizona effective October 1, 2019. This law established a new economic nexus standard for businesses that do not have a physical presence in Arizona, met in either the current or previous years:
- A marketplace facilitator has economic nexus if it facilitates, for remote seller(s) or on its own behalf, a gross amount of more than $100,000 in sales.
- A remote seller has economic nexus if the gross sales it generates into Arizona is more than $200,000 in 2019, $150,000 in 2020, or $100,000 in 2021 or beyond.
Some of these changes may not apply to your situation. We encourage you to contact us for details.