Income tax; subtraction; adoption expenses
HB2155 amends Arizona’s individual income tax subtraction statute to increase the state tax subtraction for adoption-related expenses. Under current law, taxpayers may subtract unreimbursed medical and hospital costs, adoption counseling, legal and agency fees, and other nonrecurring adoption costs up to $3,000 in the year a final adoption order is granted. The bill keeps that $3,000 limit for tax years before December 31, 2025, but raises the cap beginning in 2026 to $5,000 for a single filer or head of household and $10,000 for a married couple filing jointly.
The measure applies only to the adoption expense subtraction and does not change the other numerous subtractions already listed in Arizona Revised Statutes section 43-1022. It would therefore reduce taxable income for qualifying adoptive parents, potentially lowering state income tax liability for those who incur eligible adoption costs. The bill also allows costs incurred in prior years to be claimed in the year the final adoption order is granted, consistent with existing law.
The general sentiment around the bill appears favorable but not unanimous. It advanced through the House Ways & Means Committee on a 5-3 vote, passed House Rules 8-0, and cleared House Third Reading 40-19, indicating meaningful support in the chamber. It also received a 4-3 do-pass recommendation from the Senate Finance Committee, suggesting continued support but with some opposition.
The main point of contention is likely the tax policy tradeoff: supporters appear to view the bill as targeted relief for families pursuing adoption, while opponents may be concerned about reducing state revenue or about whether the higher subtraction is the best use of the tax code. Because the bill is narrowly focused on adoption expenses, the debate seems centered less on eligibility mechanics and more on whether Arizona should expand this family-related tax preference and by how much.
Overall, HB2155 is a targeted tax relief bill for adoptive families that increases the adoption expense subtraction beginning in 2026 and leaves the rest of Arizona’s income tax subtraction framework unchanged.
HB2155 amends A.R.S. § 43-1022, which governs subtractions from Arizona gross income for individual income tax purposes. The bill increases the maximum subtraction for qualifying adoption expenses from $3,000 to $5,000 for single filers and heads of household, and to $10,000 for married couples filing jointly, for tax years beginning after December 31, 2025. This change would lower Arizona adjusted gross income for eligible taxpayers and reduce state income tax liability for some adoptive parents, while leaving the existing treatment of other income subtractions intact.
The bill appears to have generally positive support, especially among members willing to advance it through committee and floor votes. It passed House committee and floor stages with clear majorities and received a do-pass recommendation in Senate Finance, though not unanimously. The vote pattern suggests broad agreement that adoption-related tax relief is appropriate, with some legislators still hesitant about the fiscal impact or the use of the tax code for targeted preferences.
The primary contention is fiscal and policy-based rather than technical: supporters likely argue that higher adoption expense deductions help families offset significant costs and encourage adoption, while opponents may question whether expanding a tax subtraction is the best way to provide assistance or whether the revenue loss is justified. The split votes in House Ways & Means, House Third Reading, and Senate Finance indicate that some lawmakers were unconvinced by the expansion even though the bill’s subject matter is narrow and noncontroversial in concept.