A Summary of Arizona’s 2025 Laws
In addition to changes in Arizona’s taxation system and employment regulations that are set to take effect in 2025, a number of other new laws show the state’s growing commitment to environmental protection and addressing future global issues. One such area of legislation is in electric vehicle (EV) incentives. In 2025, businesses will be taxed at lower rates for the purchase or installation of electric vehicle charging stations and individuals will see corporate tax benefits for buying EVs, including tax credits for used EVs and rebates for the purchase of new EVs.
State corporations will also benefit from the addition of research and development costs in the tax deduction equation when these expenditures lead to low-cost, renewable or recycled energy projects . In doing so, it is thought that the state will attract more manufacturers that focus on sustainability, reduce building energy consumption by 5%, and promote advancements in early-stage companies. Additionally, the law incentivizes solar energy manufacturing by allowing a single sales factor apportionment method for corporations that make investments in solar electric generating equipment in the state beginning in 2025.
The Arizona legislature also enacted legislation that directly addresses future global concerns. Beginning in 2025, the state will establish a Climate Commission that will analyze and advise the state government on the potential effects of climate change. The amount of climate change mitigation funding that the commission will be permitted to recommend will be capped at 10% of annual investment. The commission is also required to study and address the impact of the border wall on the environment, including wildlife and human beings.
The Effect of Arizona’s 2025 Laws
With the 2025 laws, one of the expected outcomes is an increase in legal disputes as people become more aware of their newly imparted rights and privileges. For instance, with the new Paid Sick Leave law and the changes to the End of Life Options Act, more employees might seek workplace accommodations or invoke sick leave than ever before. Additionally, individuals and families will likely be more likely to pursue end-of-life options. More people are also expected to make inquiries related to the terms of the latest Non-Disclosure Agreements, particularly those focusing on civil liability for sexual harassment. For Arizona businesses, these changes imply increased compliance efforts, including ensuring that policies and trainings are updated to meet the new standards and are only making promises the company intends to keep. Depending on the business, any shifts in the laws may require trainings as well as changes to software programs, supply orders, or forms. While some of the laws require no action by the companies, they do create some increased exposure due to the expanded rights granted to employees, which creates the potential for litigation.
An Examination of Arizona’s 2025 Crime and Public Safety Laws
In 2025, Arizona made several updates to its criminal laws that make the state less aggressive toward low-level offenders. The state relaxed its policy toward minor drug offenses and redirects low-level drug offenders away from incarceration and into treatment. One example is Proposition 200, which requires that any non-violent drug offenders be sent to drug treatment instead of prison. As a result, we expect to see an overall decrease in crime in Arizona.
In 2025, the Arizona Legislature passed a series of laws designed to reduce penalties for certain crimes, such as drug possession and trafficking for small amounts of narcotics. These measures are a part of a larger trend in state and federal legislation to address the issue of mass incarceration, one that has been criticized by many criminal justice reform advocates.
Some key revisions to state criminal law include the following:
Education Bills Enacted in 2025
Qualifying Arizona students that demonstrate financial need are now Jordan Education Savings Accounts, managed through the state’s College Savings Bank. A student may use his or her funds toward a variety of approved education expenses such as tuition or other mandatory fees. This program is now in addition to the Arizona Empowerment Scholarship Account program that allows families to receive scholarships to accredited private schools. The state’s school voucher system has also matured, including a wider net of qualifying students and therefore an increase in the funding available.
Arizona will additionally be expanding specialized school programs and schools throughout the state. These programs and schools will focus on early college preparation, career technical education, innovation and support for gifted students.
The new legislation contains accountability legislation for an expansion of the Arizona charter schools. Arizona charter schools have been very popular since their inception, and there is a continuing debate about the role of charter schools in education reform. There are also an increasing number of charter schools within the state. This law may help with the concerns about charter schools, as well as the added increased functions being provided to the state’s public schools.
New Environmental and Land Use Laws
As expected, environmental issues have been at the forefront in Arizona for the 2025 legislative session. We anticipate a myriad of environmental laws to be enacted, including:
Sustainable Economic Development (SB 1562)
Requires all state agencies to produce plans and offer incentives that will promote sustainable economic development. These laws would be administered by an Office of Sustainable Economic Development within the Governor’s Office. Counties, municipalities, and other public agencies may also be required to submit similar plans and would be incentivized with preferential treatment in the procurement of state grants and financial assistance .
Protecting the Environment (SB 1563)
Prohibits the State from entering into contracts with anyone who has been found guilty of destroying Native American cultural resources or who has used force or coercion against a member of an Indian tribe to gain access to its resources.
Environmental Program Budgeting Revisions (HB 2316)
Requires ASEAQ and DEQ to jointly prepare budget requests for the direct and indirect administrative costs of environmental programs in the legislature’s proposed budget and no longer allows them to include their recurring indirect administrative expenses in DEQ’s and ASEAQ’s budgets.
Arizona Water Management (HB 2657)
Requires all state water management agencies to adopt a hydrologic model of the state.
Labor and Economic Laws
In addition to the laws that went into effect in 2020, several laws took effect in 2025 that will affect economic and social factors in Arizona. One of the primary new laws is SB 1524, which provides paid sick leave for all employees. Under the law, employers must provide paid sick leave to employees who work at least 24 hours a week for 90 days of longer. Full-time employees with sick leave can take up to 40 hours of paid sick leave annually, and part-time workers with sick leave are entitled to paid sick time equivalent to 40 hours of pay yearly. Employees can carry over unused paid sick leave from the previous year as long as they have not exhausted the maximum allotted sick leave. Employers may pay employees for unused paid sick leave upon involuntary separation.
Another significant law is HB 2654, which requires employers to offer 12 weeks of paid parental leave for employees with a new child born into their home. Employees are eligible for up to twelve weeks of flexible parental leave within 12 months of a new child’s birth or adoption and do not have to be incapacitated to use leave. However, the law does not apply to full-time employees who work less than 40 hours per week. Although there are no provisions for paid leave in this law, establishing such a policy will help a business attract top talent.
Arizona has also enacted policies that encourage businesses and individuals alike to go green. The HD 2671 bill establishes a tax credit equal to 25 percent of the value of the donated clothes, shoes, and other items made to certain organizations that then distribute these items to Arizona residents. The policies were designed to support local non-profits and charities. Separately, the SB 1533 bill extends the period during which an individual can claim a solar energy systems tax credit, removing limits on the amount claimed for sales made after the previous January 1 deadline.
Arizona’s New 2025 Health Care Laws
Beginning in 2025, Arizona will have additional law changes that impact healthcare. In 2024, the Arizona legislature passed Parent Empowerment legislation. The law gave parents’ of students in at least five failing schools from the same district the ability to petition to immediately convert the district to a charter school, meaning that the district’s teachers and administration could be laid off immediately if the parents present a successful petition. Arizona snowballed the changes even further in 2025.
A new special health insurance plan called the "parent empowerment health plan" will be established. The basic premise of the health plan is simple: utilize current available funding for public healthcare, such as Medicaid, as a basis, and then let parents of students in a district petition to provide health care to those students in the same way parent empowerment worked for the schools. If parents successfully petition to create a parent empowerment health plan, the plan will go into effect immediately, allowing parents to have the power to manage their child’s health needs as well. Further, the plan will grant parents the ability to petition for a transfer of the funds from the state-run Medicaid program to pay for the treatment of their children. Essentially, it gives parents the ability to bypass the bureaucracy of the health care system and address their children’s health care needs without interference from state officials or private insurance providers.
The initial funding for the plans will come from a transfer of funds to the parents who petition for it to be established, increasing competition for the best doctors and hospitals in the areas. Once the plan has been established, it will continue to be funded separately from the state, meaning if parents petition to get the plans underway, they will not be accountable to any other portion of the state bureaucracy. Future expansions of the plans will also be funded through a transfer of funds into the health plans of parents of children in peer districts.
While the plans are sure to be controversial, their benefits far outweigh the drawbacks of the inevitable increased funding and higher costs. The benefits are not only for the parents of children in the district or the students themselves; rather, they extend beyond the children of parents in only those districts where the programs are being initiated. Because so much of the funding is flowing from the federal funding to the Centers for Medicare & Medicaid Services ("CMS") into the health plans of the parents, funding of the health plan will not only relieve the burden on the state, it will also result in a net increase in funding in the healthcare system as a whole. There are many eligible participants in these plans, which means the legislative change boosts the economy tremendously by creating a situation where parents can have a large say in the management of their child’s health. Nevertheless, because the transfers of funding are going to the parents of children in a failing district, the fiscal impact on the areas is inevitably negative, as the increased demand on a small system will place an almost useless strain on the local health service providers, who will have to begin cutting essential services to remain above water financially.
The Reaction to the 2025 Laws
In the months following their implementation, the new laws of 2025 have drawn a variety of reactions from the citizens of Arizona. For some, the changes have been met with enthusiasm and praise. Those in need of government assistance have responded favorably to new laws requiring the elimination of red tape for public programs, such as enhanced access to state benefit programs and simplified eligibility determination processes. Homeowners have also voiced approval of new laws that ban home foreclosures by major financial institutions, citing the new measures as a positive step toward increased consumer protection efforts in the state.
For others, however, the changes have not come without concern. As transparency and public participation efforts government entities have risen, critics argue that efficiency in policymaking may have been thrown aside. Business and industry groups have raised alarm that excess governmental intrusion in economic markets may result in a decrease in overall business investment in Arizona. A bill proposed by Governor Huntsman to Constitutionally require a two-thirds vote of the legislature prior to any future tax increases was met with skepticism by many business lobbies. Officials in government have even begun to wrestle with how to implement new laws in a way that does not increase the overall size of the government or create new problems for taxpayers and budget constraints.
Overall, the public has accepted many of the new laws passed in 2025 and , for the most part, appears eager and willing to adapt to the new regulations. The state’s economy has not yet seen signs that the new laws in any way inhibit or restrain consumer spending or business investment, which are vital to ensuring continued growth in the state. However, as economic forecasts continue to change and future legislative sessions come and go, doubts and concerns about the laws may only continue to increase. In particular, potential increases in costs of doing business absent a repeal of certain new regulatory measures may continue to be of significant concern for the state’s business community.
Because of the main goals of the new laws – increasing efficiency and saving taxpayers money – the state may even continue to see a willingness to sacrifice bi-partisan policymaking in favor of an increase in unilateral policymaking by the executive branch. Whereas in prior years, the legislature and governor were often engaged in negotiations and compensation in order to create bi-partisan consensus on major policy issues, this year has shown the possibility that the governor may have once again become the dominant force in the state’s legislative process. Though many new laws passed in 2025 have been met with open arms, the future is uncertain in terms of how effective they are, or whether public response will be as positive in years to come. Early indicators, however, seem to show a willing and eager populace ready to embrace the changes.