Phoenix Legislature Reaches Budget Agreement with Governor Katie Hobbs

Arizona small businesses support a tax conformity agreement finalized June 10, 2026, as part of a broader budget deal between the Arizona Legislature and Governor Katie Hobbs. Chad Heinrich, the state director for the National Federation of Independent Business (NFIB), endorsed the measure to align state tax codes with federal standards.

The agreement follows negotiations between the governor’s office and state lawmakers to resolve the budget. According to a statement from the NFIB, the tax conformity deal is a positive step for the state’s business community.

Why do Arizona small businesses support tax conformity?

Tax conformity occurs when a state adopts the internal revenue code of the federal government for its own tax purposes. When states do not conform, business owners must maintain two separate sets of books—one for federal filings and another for state filings.

The NFIB has historically advocated for conformity to reduce the administrative burden on small firms. According to the organization, eliminating the need for separate calculations reduces accounting costs and minimizes the risk of filing errors.

Heinrich indicated that the deal reached on June 10, 2026, provides the clarity and simplicity necessary for small business operations in Arizona.

How was the budget agreement reached?

The tax conformity deal was a component of a larger budget agreement between Governor Katie Hobbs and the Arizona Legislature. The two entities reached the consensus on June 10, 2026, ending a period of budget negotiations.

While the specific spending allocations of the budget were not detailed in the NFIB’s statement, the organization focused its support on the tax alignment aspect of the deal.

Governor Hobbs and the legislature finalized the terms of the budget to ensure state operations continue without interruption. The inclusion of tax conformity reflects a priority for streamlining the state’s fiscal relationship with federal tax law.