Politics
Arizona House Bill 678 Property Tax Caps and Tucson Homeowner Assessments
Tucson property owners will see their annual tax bills limited to a 2 percent annual increase starting in fiscal year 2027 under the new state formula.
How we reported this
Arizona House Bill 678 limits annual increases in primary residence property tax assessments to 2 percent for qualifying homeowners. The change applies to properties in Pima County that meet owner-occupancy rules set out in the legislation. Renters and commercial property owners receive no direct adjustment under the same provisions.
Why the adjustment arrives now
The Arizona Legislature passed the measure in the final week of the 2026 session after reviewing updated county assessment data from 2025. State revenue sharing formulas had previously tied local collections more closely to rising market values without a statewide cap. The new rules redirect a portion of state general fund resources to offset the reduced local collections in participating counties.
Tucson residents who own and live in their homes will pay less in property taxes than they would have under prior assessment schedules. City budget documents project the cap will reduce Pima County collections by an estimated $18 million in the first year, with the state backfilling that amount for school districts and municipal services. Households that rent their residences see no change in their tax exposure and may face higher rents if landlords pass along unchanged commercial tax rates.
Next steps for local implementation
Pima County assessors will apply the new cap when they mail 2027 tax statements in October 2026. The legislation requires the Arizona Department of Revenue to publish annual compliance reports by March each year. Local advocates note that the formula uses 2025 census tract data to determine eligibility, which excludes some recently built neighborhoods until the next update cycle.
City of Tucson finance staff have scheduled public briefings for August to explain how the revenue shift affects street maintenance and park budgets. The Joint Legislative Budget Committee report states that 64 percent of Tucson single-family homes qualify under current ownership records. Remaining properties continue under the existing assessment schedule without the 2 percent limit.