Sen. Mesnard Aims for a Game-Changing 50% Cut in State Income Tax Using Surplus Funds

By Matthew Holloway |

Arizona State Senator JD Mesnard (R-LD13) is advancing two significant bills aimed at reducing government size and alleviating the tax burden on Arizonans. The bills, SB1318 and SCR1014, successfully passed the Senate in February and are currently making their way through the House. These proposals mandate the Arizona Department of Revenue (ADOR) to cut the individual income tax rate by 50% of the state’s structural surplus for each Taxable Year (TY). Should SB1318 face a veto from Democrat Governor Katie Hobbs, SCR1014 will allow the public to vote on the matter in the upcoming election.

The Joint Legislative Budget Committee (JLBC) will assess the surplus for each Fiscal Year (FY), enabling proactive tax rate reductions. This approach aims to provide taxpayers with immediate savings rather than waiting for a tax dividend, which can take longer to implement.

Mesnard, known for his tax reduction initiatives, previously contributed to the landmark 2021 tax reforms that established a flat income tax rate of 2.5% for individuals in Arizona. He also introduced SB1783 that year, which lowered tax obligations for small businesses.

Despite the push for these reforms, Governor Hobbs has expressed opposition to SB1318. If vetoed, the legislature will forward SCR1014 to the Secretary of State, making it available for voter consideration. In her critique, she likened the bill to Colorado’s Taxpayers Bill of Rights (TABOR), arguing against future constraints on budgetary flexibility. “I’m not interested in tying our hands like that. No. Not like TABOR. No. That’s not tax relief,” she stated.

In a February hearing, Mesnard elaborated on his vision, stating, “This is a proposal to essentially strike a balance. When you have a surplus, let’s split it between giving money to taxpayers and the other half allocating towards whatever you want.”

Democrat Senator Brian Fernandez countered, labeling the bill as a mechanism to limit decision-making during budget negotiations. Mesnard defended the proposal, stating, “So, ‘handcuff’ is an interesting choice of words. We can put parameters on ourselves. The voters put parameters on increasing taxes back in the 90s and also, more recently, when they’re on the ballot.”

Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories or email tips to Matthew@azfreenews.com.