SB 1093 – Lower Property Tax Arizona Assessment Ratio

Arizona’s commercial property tax assessment, Senate Bill 1093, moves one step closer to passing. If it does, the Arizona assessment ratio would decrease to 15% over time. The passing of last year’s SB 1108 already calls for an 18% to 16% assessment ratio decreased by 2027.

I’m a Business Owner. How Will This Affect Me?

Arizona joins 18 other states who place a larger property tax burden on businesses, with the mindset that commercial property is different than the other seven classes. Property taxes are currently based on the assessed value, rather than what the property could sell for. The assigned assessment ratio is then applied to limited property value.

Tax policy experts in Arizona feel that the reduction is needed to solidify the state’s competitiveness, economically, and to help reduce the disparity in property tax burdens between homeowners and commercial property taxpayers.

Tim Lawless, president of the Commercial Real Estate Executives for Economic Development (CREED), said in a Chamber Business News article, “Arizona commercial property makes up roughly one-fifth of the property owned in the state, and yet we pay around one-third of the total cost incurred by property taxes. Residents are half of all the property value at 49%, and they only pay a few more percentage points than the business community who own 20% of the taxable property.”

What’s the Status of SB 1093?

This current legislation has a large support network of utilities, taxpayer advocates, health care, and chambers of commerce behind it. The Arizona Center for Economic Progress, County Supervisors Association, and organized labor oppose the bill.

As it stands, Arizona’s SB 1093 passed the Senate in February with bipartisan support. An amended version is awaiting passage by the House. If successful, the Senate must adopt the amended version prior to sending it on to Governor Doug Ducey for signature.

Whether the Arizona assessment ratio bill passes or not, commercial property owners and investors must have tax professionals working with them to navigate the new changes in the law, or to ensure they receive the most tax savings they can under the evolving property tax landscape.