House Bill 2757, passed during the 2019 Arizona legislative session, repealed the Arizona lottery subtraction. As a result, individual taxpayers may no longer subtract from their income the amount of prizes or winnings up to $5,000 in a single taxable year from any of the state lotteries.
The removal of the Arizona lottery subtraction applies retroactively to taxable years beginning from and after December 31, 2018.
This means Arizona taxpayers will not be able to subtract Arizona state lottery prizes or winnings up to $5,000 when they file their 2021 Arizona income tax return in calendar year 2022.