Arizona lawmakers and veterans gathered this week to announce a significant expansion of property tax relief for disabled service members after the governor signed House Bill 4168 into law. The legislation, cosponsored by state House Majority Leader Michael Carbone, R‑Buckeye, alters how property tax exemptions are applied to veterans with service-connected disabilities and their surviving spouses. Carbone said the changes will put Arizona among the strongest states in the country for veterans’ property tax relief.
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State lawmakers and veterans speak at an outdoor press conference in Arizona promoting expanded property tax relief for disabled veterans after the passage of HB 4168.
Under the new law, veterans who have received a 100% service‑connected disability rating will not pay property taxes on their primary residence. Those with lower disability ratings will receive property tax discounts calibrated to the level of their disability, Carbone said at a Wednesday press conference. The measure also creates protections for surviving spouses: widows and widowers of deceased disabled veterans will be able to continue receiving the property tax relief on the veteran’s primary residence.
Carbone emphasized that the statute removes two limits that had previously narrowed eligibility for veterans’ exemptions. Beginning in tax year 2027, disabled veterans will no longer be subject to caps tied to household income or the assessed value of their homes. Carbone contrasted the new framework with Arizona’s earlier system, which could strip veterans of benefits if they earned above a certain threshold or if home values rose, leaving some veterans with fewer or no exemptions despite service‑connected disabilities.
The legislative change follows a period in which advocates and legislators said the existing rules frequently disqualified veterans who appeared to meet the intended criteria for relief. “Many disabled veterans continue to work hard, build careers, start businesses, support their families and strengthen their communities,” Carbone said, noting that the policy shift was designed to allow veterans to remain in their homes. He framed the reforms as not merely technical adjustments to tax policy but as measures to ensure veterans can keep their residences as they age or continue working.
Sen. David Gowan, R‑Tucson, who joined the announcement, argued the state has a duty to assist those who risk their lives for national security. “If people are willing to sign up to die for Americans’ freedoms, then Americans should do all they can to help them,” he said. Gowan pointed to Arizona’s large veteran population, saying roughly 600,000 veterans live in the state year‑round and that the number grows further when seasonal residents arrive for winter months. He added that the influx of seasonal veterans can push Arizona’s total veteran population above that of neighboring states during those months.
Downtown Tucson, Arizona — a view of the city referenced as the state expands property tax relief for disabled veterans under the new law.
Voices from the veteran community were included at the event. Robert Garcia, identified as a veteran, said lawmakers had been asked for this type of legislation for years and that the change will help veterans remain in place and could make the state more attractive to veterans seeking work. Cheryl Schmidt, a 77‑year‑old nursing instructor at Arizona State University and a disabled Vietnam War veteran, said the exemption will be meaningful for older veterans who are no longer working. “The property tax exemption will help considerably,” Schmidt said, adding that many disabled veterans of her generation depend on such relief.
Democratic lawmakers who supported the bill framed it in terms of financial stability for those with service‑connected disabilities. State House Democratic Whip Stacey Travers, a U.S. Army veteran, said the expanded relief eases financial burdens by making homeownership more affordable and freeing up income for necessities. “This support recognizes their service and sacrifice, helps make homeownership more affordable, and frees up income for essential expenses like healthcare, home modifications and daily living costs, contributing to greater financial stability and quality of life,” Travers said. She added that passage of the bill this year was especially important as inflation continues to raise living costs nationwide.
Carbone also noted an apparent change in national standings for the state under the new law. He said Arizona now ranks first in the nation for property exemption for veterans, a sharp rise from a previous position near the bottom of national rankings; he said the state had ranked 48th before the legislation. The bill’s backers framed the move as both a recognition of military service and a policy aimed at retaining veterans within Arizona communities. The law will take effect for property tax calculations beginning in tax year 2027, and it explicitly extends benefits to surviving spouses who remain in the primary residence of a deceased eligible veteran.
The signing of HB 4168 and the accompanying press conference brought together lawmakers from both parties and several veterans who had long advocated for expanded exemptions. Officials emphasized the elements of the law that remove income and home‑value thresholds, extend exemptions to surviving spouses, and tie discount levels to official disability ratings. Those directly affected by the changes described immediate and practical benefits, particularly for older disabled veterans living on fixed incomes. The legislative reforms mark a notable shift in state policy toward how property tax exemptions for veterans are determined and administered.
Gov. Katie Hobbs signed HB 4168 on July 2, 2026, according to The Center Square. The legislation was incorporated amid the state budget process, as reflected in official updates from the Arizona Senate Republicans, with no detailed fiscal impact outlined in early coverage.
The Office of the Governor lists HB 4168 as signed by Gov. Katie Hobbs on June 13, 2026.
On final floor votes the omnibus measure passed the Arizona House on third reading 47–11–2 and passed the Senate on third reading 23–5–2.
The law amends A.R.S. §42‑11111 and is written to apply to tax years beginning from and after December 31, 2026 (i.e., taxable years starting January 1, 2027).
The bill explicitly extends the exemption to veterans rated totally disabled based on individual unemployability (TDIU/individual unemployability).
The statute allows a surviving spouse to transfer the property‑tax exemption to a subsequent primary residence by filing an exemption transfer with the county assessor within 60 days of the move.
HB 4168 was enacted as a broad taxation omnibus tied to the state budget: among its other provisions it pauses acceptance of new computer data center tax credit applications for a three‑year period, updates Arizona’s conformity to recent federal tax changes, raises standard deduction amounts, and limits the state and local tax (SALT) itemized deduction to $10,000.