A. The property of widows, widowers and persons with disabilities who are residents of this state is exempt from taxation to the extent allowed by article IX, sections 2 , 2.1 , 2.2 and 2.3, Constitution of Arizona , and subject to the conditions and limitations prescribed by this section.
B. Pursuant to article IX, section 2.3, Constitution of Arizona , the exemptions from taxation under this section are allowed in the amount of:
1. Three thousand dollars if the person's total assessment does not exceed twenty thousand dollars.
2. No exemption if the person's total assessment exceeds twenty thousand dollars.
C. On or before December 31 of each year, the department shall increase the following amounts based on the average annual percentage increase, if any, in the GDP price deflator in the two most recent complete state fiscal years:
1. The total allowable exemption amount and the total assessment limitation amount under subsection B of this section.
2. The total income limitation amounts under subsection E, paragraphs 1 and 2 of this section.
For the purposes of this subsection, “GDP price deflator” means the average of the four implicit price deflators for the gross domestic product reported by the United States department of commerce or its successor for the four quarters of the state fiscal year.
D. For the purpose of determining the amount of the allowable exemption pursuant to subsection B of this section, the person's total assessment shall not include the value of any vehicle that is taxed under title 28, chapter 16, article 3. 1
E. Pursuant to article IX, section 2.3, Constitution of Arizona , to qualify for this exemption, the total income from all sources of the claimant and the claimant's spouse and the income from all sources of all of the claimant's children who resided with the claimant in the claimant's residence in the year immediately preceding the year for which the claimant applies for the exemption shall not exceed:
1. Twenty-five thousand dollars if none of the claimant's children under eighteen years of age resided with the claimant in the claimant's residence.
2. Thirty thousand dollars if one or more of the claimant's children residing with the claimant in the claimant's residence were either:
(a) Under eighteen years of age.
(b) Totally and permanently, physical or mental disabilities, as certified by competent medical authority as provided by law.
F. For the purposes of subsection E of this section, “income from all sources” means the sum of the following, but excluding the items listed in subsection G of this section:
1. Adjusted gross income as defined by the department.
2. The amount of capital gains excluded from adjusted gross income.
3. Nontaxable strike benefits.
4. Nontaxable interest that is received from the federal government or any of its instrumentalities.
5. Payments that are received from a retirement program and paid by:
(a) This state or any of its political subdivisions.
(b) The United States through any of its agencies, instrumentalities or programs, except as provided in subsection G of this section.
6. The gross amount of any pension or annuity that is not otherwise exempted.
G. Notwithstanding subsection F of this section, “income from all sources” does not include monies received from:
1. Cash public assistance and relief.
2. Railroad retirement benefits.
3. Payments under the federal social security act (49 Stat. 620).
4. Payments under the unemployment insurance laws of this state.
5. Payments from veterans disability pensions.
6. Workers' compensation payments.
7. “Loss of time” insurance.
8. Gifts from nongovernmental sources, surplus foods or other relief in kind supplied by a governmental agency.
H. A widow, widower or a person with a disability shall initially establish eligibility for exemption under this section by filing an affidavit with the county assessor under § 42-11152 . Thereafter, the person is not required to file an affidavit under § 42-11152 , but the person or the person's representative shall annually calculate income from the preceding year to ensure that the person still qualifies for the exemption and shall notify the county assessor in writing of any event that disqualifies the widow, widower or person with a disability from further exemption. Regardless of whether the person or representative notifies the assessor as required by this subsection, the property is subject to tax as provided by law from the date of disqualification, including interest, penalties and proceedings for tax delinquencies. Disqualifying events include:
1. The person's death.
2. The remarriage of a widow or widower.
3. The person's income from all sources exceeding the limits prescribed by subsection E of this section.
4. The conveyance of title to the property to another owner.
I. Any dollar amount of exemption that is unused in a tax year against the limited property value of property and improvements owned by the individual may be applied for the tax year against the value of personal property subject to special property taxes including the taxes collected pursuant to title 5, chapter 3, article 3 and title 28, chapter 16, article 3. 2
J. An individual is not entitled to property tax exemptions in the aggregate that exceed the maximum allowed to a widow, widower or person with a disability even if the person is eligible for an exemption in more than one category.
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