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On June 30, Gov. Doug Ducey signed a major income tax cut package that, beginning January 1, 2022, caps Arizona’s income tax at 4.5 percent. Because the legislature does not have the authority to repeal or undermine a voter-approved ballot issue, majority Republicans used other strategies to circumvent Prop. 208’s effect, implementing a 4.5% cap on the maximum combined tax rate. The provision has the effect of reducing the regular income tax rate on that income to 1%, which also reduces revenue from the regular income tax. Changes in Tax Rates. Key provisions of the tax cut package, contained largely… Continue Reading Arizona enacts income tax cut to alleviate Prop. 208 state tax increase