What Are Arizona's Other Subtractions From Income?

Arizona allows certain taxpayers to reduce their Arizona taxable income by claiming specific other subtractions from income. These adjustments apply only in special situations and generally require additional documentation or supporting calculations.

You can find these entries in:

1. State Section
2. Edit Arizona Return
3. Subtractions from Income
4. Other Subtractions from Income

Arizona Other Subtractions

The following subtractions may be available if they apply to your tax situation:

1. Married Persons Filing Separate Returns - Community property adjustments for married taxpayers filing separate Arizona returns.
2. Arizona Families Tax Rebate - If the Arizona Families Tax Rebate was included in your federal adjusted gross income, you may subtract the amount received. Because your Arizona return starts with your federal income, this subtraction prevents the rebate from being taxed by Arizona. Enter the total rebate amount that is required to be included in Arizona gross income under the Internal Revenue Code.
3. Federally Taxable Arizona Municipal Interest - Interest from Arizona municipal bonds that was included in federal adjusted gross income.
4. Adoption Expenses - Qualified adoption expenses, subject to Arizona limitations.
5. Qualified State Tuition Program Distributions - Certain taxable distributions from IRC Section 529 education savings plans.
6. Installment Sale Income Taxed by Another State - Income from an installment sale that was taxed by another state in a prior year.
7. Agricultural Crops Given to Arizona Charities - Qualified donations of Arizona-grown crops to eligible charitable organizations.
8. Long-Term Care Insurance Premiums - Premiums paid for qualified long-term care insurance if you do not claim Arizona itemized deductions.
9. Fiduciary Adjustment - Adjustment reported on Arizona Form 141AZ Schedule K-1 from an estate or trust.
10. Claim of Right Adjustment for Amounts Repaid in Prior Taxable Years - Available when certain previously taxed income was repaid and Arizona's claim of right provisions apply.
11. Sole Proprietorship Income of an Arizona Nonprofit Medical Marijuana Dispensary - Income included in federal AGI that qualifies for Arizona subtraction.
12. Americans with Disabilities Act (ADA) Access Expenditures - Eligible costs incurred to improve accessibility and comply with ADA requirements.
13. Qualified Wood Stove, Wood Fireplace, or Gas-Fired Fireplace - Costs incurred to convert an existing fireplace to a qualifying unit.
14. Certain Expenses Not Allowed for Federal Purposes - Expenses disallowed federally due to certain federal tax credits.
15. Basis Adjustment for Property Sold or Otherwise Disposed of During the Year - Adjustment related to differences in Arizona and federal depreciation treatment.
16. Deferred Exploration Expenses Before January 1, 1990 - Certain mining or exploration expenses deferred under prior Arizona law.
17. Sole Proprietorship of AZ Marijuana Establishment - Eligible sole proprietors may subtract qualifying dispensary income included in federal adjusted gross income.
18. Shareholder of Arizona Marijuana Establishments - Certain expenses passed through from qualifying Arizona marijuana businesses.
19. Value of Virtual Currency and Non-Fungible Tokens Received Through an Airdrop - The value of cryptocurrency or NFTs received at the time of an airdrop.
20. Gas Fees Not Included in Virtual Currency or NFT Basis - Qualifying blockchain transaction fees that were not already included in basis calculations.
21. Distribution From an Account Established Under IRC Section 530A - Enter qualifying distributions from an account established under Internal Revenue Code Section 530A ("Trump Account") that are included in Arizona gross income.
22. Child and Dependent Care Expenses Under IRC Section 21 - You may subtract child and dependent care expenses paid or incurred during the tax year that exceed the amount of the federal credit claimed under IRC Section 21.
23. Other Adjustments - Use this field for any allowable Arizona subtraction that is not specifically listed above. If more than one adjustment applies, combine the amounts and enter the total here.

Do I Need to Enter an Amount?

Most Arizona taxpayers will not have an entry in the Other Subtractions section. If none of the listed situations apply, leave the fields blank or enter zero as directed by the software.

Additional Information