Cities and towns across the state are planning for anticipated revenue shortages after a residential rental tax ban was signed into law last fall. In August, Gov. Katie Hobbs signed a bill that would prevent cities and towns from collecting rental tax on residential rental properties.And that could hit some cities hard. Lee Grafstrom is the tax policy analyst for the League of Arizona Cities and Towns. He says the city of Tempe is projected to lose out on about $20 milion-25 million.“When you take away a small amount of tax paid by an individual, you know, $20 a month or what have you, the impact, the negative impact on the city or town is much greater because of the cumulative effect of all those taxpayers not paying $20 each. $20 to me is not a big deal. $20 million to the city of Tempe is a big deal,” he said. The law goes into effect January 2025.While the ban is supposed to help mitigate soaring rental costs, it’s also projected to take away $240 million-250 million dollars from city and town revenue.”We wish there would be some sort of replacement for that as opposed to just forcing the cities to raise their own taxes and go through all of those issues,” he said.As KJZZ News reported in February, Phoenix City Council members have been told not to add services or programs because of the estimated revenue shortfall.
See the full article on Arizona tax laws, or, read more Arizona real estate investing news. It’s your call!