Your Arizona home, no matter what type of “home,” is now protected. Arizona SB 1540 is a big deal for every Arizona resident—because it strengthens the legal protections around the place you live.

Arizona’s homestead laws exist for one core reason: to keep people housed. SB 1540 modernizes those protections and adds an especially important clarification for people in bankruptcy.

 

 

What SB 1540 does:

✅ It recognizes that “home” isn’t always a traditional house.
The law expands the homestead definition to include many common Arizona living situations—mobile homes, park model trailers, motor homes, travel trailers, fifth wheels, houseboats, manufactured homes, and other forms of shelter—and (importantly) the protection can include the land the shelter sits on. (SB1540)

✅ It confirms the homestead exemption keeps adjusting upward with inflation.
SB 1540 spells out the annual cost-of-living adjustment method (CPI-based, rounded up). (SB1540)

✅ New 2026 homestead exemption amount: $437,600.

✅ Major bankruptcy clarification: appreciation during the case stays protected.
SB 1540 adds language specifically for bankruptcy cases:

• The homestead exemption is determined as of the date the bankruptcy petition is filed; and
• If your equity is within the exemption amount on the filing date, the homestead is treated as 100% exempt—and any increase in the home’s value during the bankruptcy case is also 100% exempt, even if the value later rises above the exemption cap. (SB1540)

Why that matters: people shouldn’t lose their home (or the chance at a stable fresh start) just because the market rises while their case is pending. SB 1540 reinforces the idea that bankruptcy is a reset—not a race against appreciation. (SB1540)

✅ It protects certain refundable tax credits from most creditors.
SB 1540 exempts federal/state Earned Income Tax Credits and Child Tax Credits (as described in the statute). (SB1540)

A quick (important) heads-up

SB 1540 also adds a practical “how do we measure equity?” rule for real-life transactions. For purposes of (1) determining the amount of equity when a homestead is sold, or (2) determining whether a homeowner is getting cash back from refinancing, the parties can rely on the property value shown in the final closing disclosure for that transaction. (SB1540)

When it applies

SB 1540 was approved and filed on May 2, 2025. (SB1540)
It provides that the bankruptcy homestead provision applies to bankruptcy petitions filed after the act’s effective date. (SB1540)
Arizona’s general effective date for most 2025 laws is September 26, 2025. (SB1540)

Legal information only—not legal advice. If you’re dealing with creditor collection, judgment liens, a refinance, or considering bankruptcy, talk with a qualified Arizona attorney about your specific facts.