The 2026 Arizona ‘Job Killers’ List

In partnership with the Arizona Chamber Foundation, CSI Arizona identified 119 bills introduced during the 2026 Arizona regular legislative session that were either substantial tax increases, labor cost increases, new legal and administrative burdens, or other new fees and operating restrictions for Arizona businesses. Ultimately none of the bills on this list were enacted. However, the introduction and consideration of this and similar legislation is an annual exercise, and the trend (to consideration and passage from non-consideration) can change quickly. For example, before 2019 and as far as CSI has identified, Colorado had not enacted any of these bills, either. In just six years, though, the state managed to pass dozens. Every year, more are introduced, and it is now normal for at least several major new regulatory acts to be enacted every legislative session in Colorado, and indeed many other states.

An initial econometric analysis using CSI’s REMI simulation software suggests enactment of 88 of the 119 bills identified and tracked by the Arizona Chamber would have imposed at least $31 billion in new annual costs on Arizona. These new costs could reduce Arizona employment by 424,400 jobs (-9%); reduce real disposable personal income per-capita by up to $4,100/year (-7%); and reduce real state Gross Domestic Product by $48 billion (-8%) once impacts are fully realized. This analysis assumes sudden and simultaneous enactment of those bills for which an explicit cost was estimated, and actual costs may be less or greater than those represented here based on implementation. However, the potentially damaging consequences of these bills are clear based both on our analysis and based on the economic trajectory of states like Colorado that have chosen to enact many of these very same bills.

The impact estimates in the sections to follow generally represent the direct, first-order costs associated with the proposal. In a few cases, CSI provides a more in-depth analysis which includes broader, dynamic impacts using more detailed techniques and forecasts developed using the REMI TaxPI+ model for Arizona.

Tax Increases

Arizona boasts one of the lowest individual income tax regimes in the nation, tied with North Dakota for the lowest rate among states that levy an individual income tax. Although this low income tax regime has been enshrined in law since 2021, there has been no shortage of attempts to increase taxes on individuals and businesses and roll back the state’s tax competitiveness. There were twelve bills introduced during the 2026 legislative session that would have created new or significantly increased existing taxes on individuals and businesses. CSI estimates the total tax increase would have been nearly $3.8 billion. 

Just two of these bills would have imposed nearly $3 billion annually in new costs for individual taxpayers in the state, while eliminating Arizona’s standing as one of the most competitive states in terms of income tax structure. As highlighted above, these changes alone could have significantly impacted the state’s ability to attract both businesses and productive workers, limiting its future growth potential. 

Substantive tax increases introduced this year included:

3.5% tax on personal income over $250,000

$1.5 billion

HB4095 would have imposed an additional 3.5% tax on all income earned above $250,000 ($500,000 for joint filers), affecting over 100,000 Arizona residents who contribute $60 billion annually to the state’s economy. Many of these filers are small business owners operating as pass-through entities, such as S-corporations and LLCs, where new taxes hurt their ability to grow and create jobs.

8% tax on personal income over $1 million

$1.3 Billion

By imposing an 8% personal income tax on filers earning over $1 million annually, HB2629 would have meaningfully eroded Arizona’s tax competitiveness and placed a heavier burden on pass-through entities that file through the personal tax system, pushing the state from a tie for the nation’s lowest top marginal income tax rate to roughly 10th-highest overall. This is particularly striking given that, even under Arizona’s current flat tax, filers earning over $1 million already contribute more than 18% of the state’s income tax revenue while accounting for just 15% of total income earned statewide.

Elimination of single sales factor for corporate income

$292.9 million

Because corporations generally operate in multiple states, they are required to use complex formulas to determine how much they owe in taxes to each state. These formulas directly influence business and investment decisions, especially if expanding operations leads to a larger tax liability. To incentivize investment, most states with a Corporate Income Tax overweight or single-weight the sales factor. SB1575 would have rolled back Arizona’s single-weight sales factor formula, reducing tax incentives to invest here.

Removal of TPT exemptions for sale of computer data center equipment

$38.5 million

Several bills introduced during the 2026 legislative session sought to eliminate the Computer Data Center Program (CDC Program), which exempts equipment purchases for qualified data centers from Arizona’s Transaction Privilege Tax (TPT). These exemptions mirror those available to manufacturers in the state, preventing the tax pyramiding effect in which intermediate goods and equipment purchased for the production of final goods and services accumulate costs at each stage of the supply chain. Although none of these repeal bills advanced past committee, the enacted fiscal year 2027 budget still curtailed the program, imposing a three-year pause for new applications to the Arizona Commerce Authority CDC program between July 1, 2026, and June 30, 2029.

1% payroll tax on most employers

$32.6 million

Previously, Arizona had a “job training tax” — a 0.1% payroll surcharge to fund adult education programs that was repealed in 2017. HB2461 would have reinstated this concept at ten times that rate, imposing a 1% payroll tax on all companies employing at least 50 people. Payroll taxes of this size can affect labor market dynamics, potentially discouraging employers from increasing compensation or hiring. Policymakers should weigh whether this scale of increase is the most efficient way to fund adult education.

$1,000 minimum corporate income tax

$3.9 million

Generally, taxpayers only pay a tax when they realize sales or income from a taxable activity. However, corporate income taxpayers must make a minimum $50 tax payment regardless of sales or earnings. HB2629 increases that minimum tax to $1,000, creating substantial tax liability even if the business is not generating any significant income.

Additional bills with components that increase state taxes and fees are identified in the full table of ‘job killers’ that accompanies this report.

Labor Cost Increases

There were 23 bills introduced during the 2026 legislative session and identified by the Arizona Chamber as imposing new costs or mandates on how employers and employees interact. CSI estimates the total economic cost of these new labor regulations would have exceeded $17.5 billion.

Most of the bills in this category were either duplicative, or would have imposed potentially small or indeterminate new costs on employers in the state. However, eight of the bills identified by the Arizona Chamber Foundation and CSI would have carried significant costs, including the repeal of right-to-work in Arizona.

Other bills considered and rejected by the Arizona Legislature this year would mandate many aspects of the employer-employee relationship, including a drastic change to overtime hours, mandating unpaid break and lunch periods, and destructive increases to the state’s already high minimum wage. If enacted, these changes would threaten Arizona’s economic competitiveness and dramatically slow employment and productivity growth in Arizona.

Substantive labor cost increases introduced this year included:

Repeal of right-to-work

$5.3 billion

SCR1035 and HCR2022, along with their companion bill HB2464, would have repealed Arizona’s 70-year-old right-to-work law, which gives workers the freedom to choose whether or not to join labor unions. In states without these protections, labor unions can force employers to operate “closed shops” where only union members can be hired, which can significantly increase labor costs. A 2021 Harvard study notes “states with Right-To-Work (RTW) laws have experienced higher employment and population growth than states without such laws”.  CSI assumes — based on this and other similar research — that repeal of right-to-work in Arizona would reduce annual economic growth by 21%, bringing the average annual growth in GDP over the next 5 years to 3.05% from 3.86% and costing the state between 30,000 and 40,000 jobs according to forecasts using REMI’s TaxPI+ model for the state of Arizona. Although this estimation resides on the conservative end of what prior research suggests, the repeal of right-to-work would still have the single largest negative economic impact of any of the bills quantified in this report.

Mandatory paid leave programs

$1.8 billion

A now annual exercise in Arizona, state-funded and mandated leave programs have become popular in recent years. Seventeen states, including Colorado, have enacted these kinds of programs. Various studies have linked the programs and the taxes that fund them to increased costs of doing business and reduced economic output. For example, a 2019 study by CSI Colorado estimated the cost of that state’s new mandatory family leave program at $1.3 billion annually.

Scheduling, break, and overtime standards

$2.5 billion

HB2466 would have expanded existing federal and state rules that regulate employee scheduling and overtime pay. Among other things, it would require employers to pay overtime for any time worked over eight hours in a single work day, significantly increasing labor costs for businesses employing people that work four ten-hour shifts instead of five eight-hour shifts. The law would also mandate that employers provide unpaid meal breaks, even if employees prefer to work through their mealtimes in exchange for shorter workdays or higher compensation. 

Minimum wage increases

Up to $1.9 billion

Arizona already has one of the highest minimum wages in the country. At $15.15/hour, it is the 10th highest statewide minimum and more than double the federal minimum. The current minimum wage is also voter-protected and tied to the Consumer Price Index, meaning it rises automatically to keep pace with annual cost of living increases. Even with these built-in raises, three bills attempted to raise the minimum even further, at great economic risk. Academic economists generally agree that the minimum wage reduces employment and productivity growth, and harms long-run economic growth. Though it may benefit minimum-wage earners who remain employed, it results in fewer workers overall, and fewer hours for those that remain, as well as increased costs for businesses who are forced to pay higher wages.

Heat illness prevention

$1.3 billion

Under Arizona’s Industrial Commission and the federal Occupational Safety and Health Administration requirements, Arizona employers have a clear responsibility to protect employees from heat-related illness. In December 2025, Governor Hobbs’ Workplace Heat Safety Task Force, which included representation from the Arizona Chamber of Commerce & Industry, delivered voluntary Heat Guidelines for Employers, now under review by the Industrial Commission of Arizona ahead of final consideration this spring. These guidelines prioritize worker safety while recognizing the diversity of industries and job sites across our state. HB2684, HB2928, and SB1377 would add additional mandates, including prescriptive training, documentation, and supervisory requirements onto that existing framework, limiting employers’ ability to tailor safety programs to different workplaces and potentially creating new litigation exposure without demonstrating commensurate safety benefits.Additional bills with components that increase labor and hiring costs are identified in the full table of ‘job killers’ that accompanies this report.

Energy and Environmental Cost Increases

Of the 119 bills tracked by the Arizona Chamber, CSI identified 20 that would impose new energy and environmental regulations. CSI estimates the total economic cost of these new environmental regulations would reach $7.1 billion.

American businesses already shoulder a heavy regulatory load when it comes to environmental compliance. By one estimate, roughly 2% of GDP is devoted to meeting existing state and federal environmental standards. Colorado provides a stark illustration: a review of 12 statewide energy and environment policies enacted or under consideration since 2019 tallied close to $1 billion in new annual compliance costs for businesses, out of at least 55 separate energy and environmental regulations the state has put in place during that span. Arizona’s experience also demonstrates the importance of designing water policy around measurable conservation outcomes rather than simply restricting growth. Policies that constrain new housing development without addressing higher-intensity water users can worsen housing affordability while producing limited net water savings. Durable water policy should encourage conservation, infrastructure investment, augmentation, and efficient development while providing the certainty necessary for communities and employers to grow. 

50% renewable electricity generation mandate

$3.0 billion

HB2551 and SB1385 would require Arizona’s electric distribution utilities to generate at least 50% of their electricity from “renewable energy sources” by 2035 and 2036, respectively. While proponents often claim that wind and solar are cheaper sources of electricity than conventional alternatives, these analyses ignore the intermittency inherent to this technology. After accounting for the additional costs required to account for this intermittency (both by building more base generating capacity, and by building redundant backup capacity in the form of either batteries or fast-cycle natural gas), mandates like these could increase electricity costs for consumers and businesses by over 25%, or an estimated $3.0 billion based on 2024 EIA data. The overall economic costs would be much greater, including nearly 40,000 jobs by year four and upwards of $4.5 billion in state GDP. 

100% renewable energy mandates for data centers

$3.0 billion

HB2467 would impose a substantial cost burden on Arizona’s data center industry by simultaneously repealing the Computer Data Center Program’s tax exemption and requiring facilities to shift to renewable energy with battery storage. Using Arizona Department of Revenue tax expenditure estimates combined with the added generation cost of moving the state’s 41 active data centers (2,661 megawatts of capacity, operating near-continuously) off a nuclear and natural gas baseline onto wind and solar, the combined economic impact is estimated at roughly $3.0 billion, driven largely by the $143 per megawatt-hour gap between conventional and intermittency-adjusted renewable costs. That combined burden would likely raise operating costs for existing and prospective data center investment in Arizona, weakening the state’s competitive position relative to other states without comparable mandates.

Groundwater withdrawal fees

$247 million

Because HB2515 leaves the fee entirely to the State Land Department’s discretion, with only a vague “fair market value” intent clause and no statutory cap, formula, or phase-in, the open-ended structure creates real exposure to punitively high costs across the 154,188 acres of state trust land currently under agricultural lease. Without a ceiling in statute, a fee set at the high end of comparable market-value benchmarks (potentially $75–$250 per acre-foot, well above the roughly $5 per acre-foot cap that applies to comparable withdrawal fees inside Active Management Areas) could impose costs that far exceed what agricultural operations on this land can absorb, particularly for water-intensive crops like alfalfa and pasture grasses that require several acre-feet per acre annually. Lessees would have no advance notice of the rate and no statutory recourse to challenge it as excessive, leaving the door open for a fee that functions less like a market-based cost recovery mechanism and more like a de facto penalty on continued agricultural use of state trust land.

Additional bills with components that increase energy and environmental costs are identified in the full table of ‘job killers’ that accompanies this report.

Legal & Administrative Cost Increases

CSI and the Arizona Chamber identified 66 ‘job killing’ bills imposing new legal and administrative compliance burdens on Arizonans. CSI estimates the total economic cost of these new general administrative regulations would reach $3.3 billion.

In keeping with prior years and the growing policy trend across the nation, several price control and anti-price-gouging bills were introduced this session as a shortcut to affordability. HB2718 would have capped annual rent increases, a drastic reversal from the state’s history of barring cities and towns from adopting rent control since 1985. Rent control’s record elsewhere is a cautionary tale rather than a template: caps on rent increases have repeatedly been shown to reduce landlord investment in maintenance, accelerate the conversion of rental units to condominiums or owner-occupied housing, and shrink the very rental supply that price pressure is meant to relieve.

Other proposals extended this same logic well beyond housing: restricting who could purchase single-family homes, allowing municipalities to ban plastic bags, and imposing new restrictions on pharmacy benefit managers that would likely raise prescription drug costs, among others. Taken together, these bills reflect a common instinct, which is to treat price as the problem rather than a symptom of something else. Mandating a lower price rarely changes the underlying supply-and-demand imbalance driving it, and often makes that imbalance worse.

Mandatory “cash pay”

$558 million

HB2555 would have required Arizona retailers with physical locations to accept cash payments for all transactions under $100. The introduction of this bill in Arizona follows a national trend of states enacting mandatory cash payment options (including Colorado in 2021). However, these well-intentioned mandates often fail to consider the tradeoffs inherent in a business’s decision to accept or refuse any form of payment, particularly on the margin.

Accepting cash is not costless. A business must purchase cash counting and storing equipment; hire staff to transport cash from the business to its bank for deposit; account for losses due to accidental or deliberate mishandling; and account for the cost of the additional time required to process cash transactions. According to one industry study, administrative costs of accepting cash range from 4.7% to 15.3% per transaction, depending on the size and efficiency of the business’s cash operation. For context, credit card processing fees typically range from 1% to 3%, and cashless pay options (like Square) typically charge fees in the 3.5% range.

Mandatory non-functioning goods replacement

$327 million

HB4076 would restrict merchants’ ability to triage cheaper fixes of defective goods and instead force them into costly mandatory replacements or full refunds within the immediate post-sale window. While on the surface this looks like a consumer protection bill, it would in fact impose costly mandates on businesses and prevent them from remedying defective goods through more cost-effective repairs, with those costs ultimately being passed down to the consumer via higher prices. 

Restrictions on pharmacy benefits managers

$290 million

The American healthcare and insurance system is highly complex, highly regulated, and very expensive. The process is often frustratingly opaque for patients, due to the involvement of various intermediaries between them and their healthcare providers. A pharmacy benefit manager is such an intermediary, who negotiates pharmaceutical benefit reimbursement rates on behalf of insurers and other payers – and because of this status, they make an easy villain. However, their role is important; the pharmacy has little incentive to negotiate lower drug costs, and patients rely on their insurance company or benefit plan to pay those costs on their behalf.

HB2196 and HB4124 – though well-intentioned – would increase benefit costs and reduce incentives to seek to lower drug and pharmaceutical prices. Not only would this bill likely increase insurance costs directly (by an estimated $290 million statewide), but also ultimately contribute to higher rates of healthcare inflation generally. The primary beneficiaries would not be patients, but pharmacies.

“Price gouging” prohibition

$125.3 million

Government has a legitimate role in protecting consumers from fraud or deceptive conduct during emergencies. Broad price-control statutes, however, interfere with price signals and can harm the very people they set out to protect. Unfortunately, several bills introduced this session would have implemented anti-price-gouging laws, preventing the price signal from carrying out this very function. Research suggests these laws can have detrimental effects. One such study found that anti-price-gouging laws would have increased the economic damage experienced during Hurricane Katrina by upwards of 2.3%. Looking to Arizona, the state faced $5.4 billion in total damages in 2010 due to flooding and storms, which, using the same estimation, meant that price controls could have increased damages by $125.3 million.

Additional bills with components that increase administrative and legal costs are identified in the full table of ‘job killers’ that accompanies this report.

The Bottom Line

Arizona’s Competitive advantage is not guaranteed. It has been built through a combination of smart policy decisions including competitive taxes, regulatory restraint, reliable infrastructure, right-to-work protections, responsible resource management, and welcomed innovation and investment. Maintaining this position is more important than ever as policymakers continue to confront challenges involving affordability, workforce, energy, water, and rapid technology changes. Caution must be taken to continue to encourage investment and preserve flexibility and not overregulate, tax and implement mandates that make it more expensive to hire, build, and grow the state’s economy. Arizonans must be careful not to abandon support for the pro-growth policies that built the state into a modern success story in favor of quick fixes and top-down policy interventions that distract from real solutions and jeopardize future economic growth.