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Arizona House passes bill that would eliminate grocery tax

Senate Bill 1063 passed Wednesday along party lines in the Arizona House. The legislation would prohibit cities from levying a grocery tax.

PHOENIX — Arizona's Republican lawmakers have passed a bill that would prohibit cities from taxing groceries. 

In a 31-29 vote, the Arizona House of Representatives passed Senate Bill 1063 along party lines Wednesday afternoon. 

If signed into law, the bill would stop all municipalities from levying a tax on food and beverage items intended for home consumption. The bill wouldn't take effect until July 2025.

Republican representatives argue the legislation is necessary to provide financial relief to low-income residents who are feeling the burden of inflation. 

But Democrats claim SB 1063 would be harmful to municipalities and could result in cities raising other taxes to make up for the lost revenue.

According to legislative documents, the bill would reduce transaction privilege tax revenue by $195 million in the fiscal year 2026. 

VERSIÓN EN ESPAÑOL: La Cámara de Arizona aprueba propuesta que pudiera eliminar el impuesto en comestibles

Some of the state's cities already don't charge a grocery tax.

But many representatives of cities from throughout Arizona are listed as being against SB 1063 on the Legislature's website. State data shows that 65 out of Arizona's 91 municipalities levied a grocery tax in the fiscal year 2022.

Chandler City Councilman Matt Orlando recently published an editorial expressing his concern about how the tax cut would affect his city's ability to fund important services.

"One of the problems with this is obvious – cities will be on the hook to either find that money in other places or make cuts to services," Orlando wrote in the Chandler Arizonan.

SB 1063 passed through the Arizona Senate in a 16-13 vote last month.

Without much support from Democrats, the bill may fall victim to another veto from Gov. Katie Hobbs, who has already vetoed a proposed cut to Arizona's rental tax earlier this session.


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