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Gov. Hobbs calls for tax cuts in State of State Address

Governor Hobbs proposes $200 million middle-class tax cut funded by new fees on data centers and short-term rentals, starting with a $20 million Arizona Affordability Fund.

  • On Jan. 12, Governor Katie Hobbs delivered the 2026 State of the State to a joint session at the Arizona State Capitol, giving lawmakers their first look at her agenda for the session.
  • Governor Katie Hobbs framed the speech around household strain and water security, saying, `I think we can all agree that Arizonans are struggling with increased costs, medical costs, groceries, and they need some relief` as she sought bipartisan support.
  • Hobbs proposed specific new fees and dedicated affordability funds, including a $3.50 short-term rental fee and a $20,000,000 Arizona Affordability Fund plus $2,500,000 for housing acceleration.
  • Republican leaders signaled resistance to key proposals, with Sen. Jake Hoffman, R-Queen Creek, leading obstruction efforts and GOP lawmakers presenting an alternative tax plan last week.
  • With every legislative seat up this year, the session carries high stakes as Governor Katie Hobbs will release the executive budget on Jan. 16 amid more than 200 bills filed for the 57th Arizona Legislature.
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KPNX broke the news in Phoenix, United States on Monday, January 12, 2026.
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