MCTCP Worksheet: Class Tax Cuts Package (MCTCP) Worksheet (2025)

Who files this form

For tax year 2025, taxpayers who qualify for these federal deductions may also take them on their Arizona individual income tax return:

• Qualified tips deduction.
• Qualified overtime compensation deduction.
• Qualified passenger vehicle loan interest deduction.
• Enhanced deduction for seniors.

Use this worksheet to prepare the Other Subtractions Schedule. Keep it for your records rather than filing it with your return.

Arizona residents who want to claim these deductions must file Form 140. The deductions are not available on Form 140A or Form 140EZ.

What you'll need

Have these amounts available to complete the worksheet:

• Other Adjustments not related to the MCTCP.
• IRS Schedule 1-A, line 13: qualified tips deduction.
• IRS Schedule 1-A, line 21: qualified overtime compensation deduction.
• IRS Schedule 1-A, line 30: qualified passenger vehicle loan interest deduction.
• IRS Schedule 1-A, line 37: enhanced deduction for seniors.

If you filed separately federally but jointly in Arizona and claimed qualified vehicle loan interest, use the amounts from both separate federal returns.

How to file

Do not submit this worksheet with your return. Use it to prepare the Other Subtractions Schedule, then keep it for your records.

1. Enter Other Adjustments not related to the MCTCP on line 1.
2. Enter the applicable deduction amounts from IRS Schedule 1-A on lines 2 through 5, following the worksheet's filing-status rules.
3. Add lines 1 through 5 and enter the total on line 6.
4. Transfer the total to Other Adjustments at the location listed for your Arizona return:

• Form 140: page 6, line V.
• Form 140PY: page 6, line Y.
• Form 140NR: page 6, line P.
• Form 140X: page 7, line V; page 9, line P; or page 11, line Y.

Common mistakes

• Sending the worksheet with your return. The form says to keep it for your records and not submit it.
• Claiming these deductions on Form 140A or Form 140EZ. They are not available on those forms. Arizona residents claiming them must use Form 140.
• Subtracting tips or overtime that were not included in Arizona gross income. For Form 140PY and Form 140NR filers, only qualified tips and overtime compensation included in Arizona gross income may be subtracted.
• Including a spouse's amounts when filing separately in Arizona. If you filed jointly federally but separately in Arizona, reduce the federal subtraction amounts to include only the taxpayer's amounts, not the spouse's.

Questions people ask

Do I send the MCTCP worksheet with my Arizona return?

No. Use it to prepare the Other Subtractions Schedule and keep it for your records.

Can I claim these deductions on Form 140A or Form 140EZ?

No. An Arizona resident who wants to claim these deductions must file Form 140.

What if I file jointly federally but separately in Arizona?

Reduce the subtraction amounts from the federal return to include only the taxpayer's amounts, not the spouse's.

What if filing separately federally kept me from claiming certain deductions, but I file jointly in Arizona?

If filing separately federally made you ineligible for the enhanced senior deduction, qualified tips deduction or qualified overtime compensation deduction, compute your Arizona subtraction as if you had filed married filing jointly federally.

How do we handle vehicle loan interest if we file separately federally but jointly in Arizona?

If you claimed the qualified vehicle loan interest deduction on your federal returns, combine the amounts claimed on the two separate federal returns. That combined amount is the qualified vehicle loan interest subtraction on your Arizona joint return.

Official sources

• https://azdor.gov/forms