Assigned to COM AS PASSED BY COW
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR H.B. 2822
personal property; additional depreciation
Purpose
Requires the county assessor to adjust the depreciation schedule prescribed by the Arizona
Department of Revenue (ADOR) by using a valuation factor of 2.5 percent to determine the
valuation of certain subclasses of class 1, class 2 and class 6 personal property initially classified
during or after TY 2022.
Background
Statute outlines an additional depreciation schedule for certain subclasses of class 1, class
2 and class 6 personal property. For qualifying class 1 and class 2 personal property initially
classified beginning in TY 2012 and qualifying class 6 property acquired beginning in TY 2017
and initially classified beginning in TY 2018, the current schedule allows the qualifying property
to be valued at: 1) 25 percent of the depreciated value in the first year of assessment; 2) 41 percent
of the depreciated value in the second year; 3) 57 percent of the depreciated value in the third year;
4) 73 percent of the depreciated value in the fourth year; 5) 89 percent of the depreciated value in
the fifth year; and 6) the scheduled depreciated value as prescribed in ADOR's guidelines, for the
sixth year and thereafter. The additional depreciation may not reduce the valuation below the
minimum value prescribed by ADOR for property in use (A.R.S. § 42-13054).
A minimum valuation factor is applied if personal property is still in use after the number
of expected life years has passed. Personal property still in use maintains a minimum value, never
reaching zero, until it is scrapped or discarded. For personal property that qualifies for additional
depreciation, ADOR must reduce the minimum value by 2.5 percent good each year (ADOR;
A.R.S. § 13055).
The Joint Legislative Budget Committee fiscal note estimates a cost to the state General
Fund of $23.4 million in FY 2023 and specifies that the amount does not include any dynamic
effects that may occur as a result of any potential behavioral responses of taxpayers (JLBC fiscal
note).
Provisions
1. Sets the additional depreciation schedule at a valuation factor of 2.5 percent to determine the
valuation of:
a) qualifying subclasses of class 1 and class 2 personal property initially classified during or
after TY 2022; and
b) qualifying subclasses of class 6 personal property acquired during or after TY 2022 and
initially classified during or after TY 2022. FACT SHEET – Amended
H.B. 2822
Page 2
2. Makes conforming changes.
3. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
• Applies the additional depreciation schedule valuation factor of 2.5 percent to qualifying
subclasses of class 2 personal property acquired during or after TY 2022, rather than only
acquired during TY 2022.
House Action Senate Action
COM 2/15/22 DP 8-2-0-0 COM 3/9/22 DP 6-3-0
3
rd
Read 2/23/22 35-24-1
Prepared by Senate Research
March 23, 2022
MG/sr