Article

Arizona’s SB 1093 proposing decrease in commercial property tax moves closer to passage

March 31, 2022

Proposed Arizona Senate Bill 1093 aims to decrease the commercial property tax assessment ratio to 15%. The bill would continue the 18% to 16% assessment ratio decrease by 2027 that was scheduled last year after the passing of SB 1108.

Arizona is one of 18 states that consider commercial property different than other classes, placing a greater property tax burden on businesses. Property taxes in Arizona are based on the assessed value instead of what the property could sell for. This is determined by applying the assigned assessment ratio to the limited property value.

“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,” said Tim Lawless, the president of CREED, Commercial Real-estate Executives for Economic Development in an article from Chamber Business News. A previous attempt to understand why the state was incapable of attracting jobs drew the conclusion that was due in part to uncompetitive commercial property taxes. Lawmakers and governors responded in 2006 by successfully lowering the assessment ratio from 25% to 20%.

An amended version of the bill now awaits a House vote.

If the bill passes, what should commercial property owners and investors in Arizona expect to see in their value notices and tax bills? Or yet, what should they expect to see if the commercial property tax decrease bill does not pass through the House?

With the property tax landscape rapidly changing, it is imperative that commercial property owners and investors have a seasoned property tax consultant on their side to help navigate changes in tax law and make necessary changes to their appeal approach to ensure maximum tax savings in the evolving landscape. Baker Tilly’s team of nationwide property tax consultants possesses both the local knowledge of Arizona tax law and the veteran expertise of historical tax law changes to serve as an agile tax advisor for your entire portfolio.

Contact our Arizona property tax specialists' today to ensure your Arizona properties are valued and taxed fairly this tax year.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.