E. The property of a widow or widower or a person with a total and permanent disability is exempt in the amount of:

1. 1. $4,188 if the person's total assessment does not exceed the amount provided in paragraph 2 of this subsection.
2. 2. No exemption if the person's total assessment exceeds $28,459.

F. On or before December 31 of each year, the department shall increase the following amounts:

1. 1. The total allowable exemption amount under subsection D and subsection E, paragraph 1 of this section based on the average annual percentage increase, if any, in the GDP price deflator in the two most recent complete state fiscal years.
2. 2. Beginning in tax year 2026, the total assessment limit amount under subsection E, paragraph 2 of this section based on the average annual percentage increase, if any, in the federal house price index for the two most recent complete state fiscal years.
3. 3. The total income limit amounts under subsection H, paragraphs 1 and 2 of this section based on the average annual percentage increase, if any, in the GDP price deflator in the two most recent complete state fiscal years.

H. Pursuant to article IX, section 2, subsection F, 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. 1. $34,901 if none of the claimant's children under eighteen years of age resided with the claimant in the claimant's residence.

2. 2. $41,870 if one or more of the claimant's children residing with the claimant in the claimant's residence either:

   1. (a) Were under eighteen years of age.
   2. (b) Had a total and permanent physical or mental disability, as certified by competent medical authority as provided by law.

I. For the purposes of subsection H of this section, "income from all sources" means the sum of the following, excluding the items listed in subsection J of this section:

1. 1. Adjusted gross income as defined by the department.
2. 2. The amount of capital gains excluded from adjusted gross income.
3. 3. Nontaxable strike benefits.
4. 4. Nontaxable interest that is received from the federal government or any of its instrumentalities.

5. 5. Payments that are received from a retirement program and paid by:

   1. (a) This state or any of its political subdivisions.
   2. (b) The United States through any of its agencies, instrumentalities or programs, except as provided in subsection J of this section.
6. 6. The gross amount of any pension or annuity that is not otherwise exempted.

J. Notwithstanding subsection I of this section, income from all sources does not include monies received from:

1. 1. Cash public assistance and relief.
2. 2. Railroad retirement benefits.
3. 3. Payments under the federal social security act (49 Stat. 620).
4. 4. Payments under the unemployment insurance laws of this state.
5. 5. Payments from any veterans pensions.
6. 6. Workers' compensation payments.
7. 7. Loss of time insurance.
8. 8. Gifts from nongovernmental sources, surplus foods or other relief in kind supplied by a governmental agency.

K. A widow or widower, a person with a total and permanent disability or a veteran with a disability shall establish eligibility for exemption under this section by filing an affidavit with the county assessor under section 42-11152 when initially claiming the exemption. Each year thereafter, 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 notify the county assessor in writing of any event that disqualifies the person 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. 1. Except as provided in subsection C of this section, the person's death.
2. 2. The remarriage of a widow or widower.
3. 3. The person's income from all sources exceeding the limits prescribed by subsection H of this section.
4. 4. The conveyance of title to the property to another owner.

N. For the purposes of this section:

1. 1. "Competent medical authority" means any of the following:

   1. (a) An individual licensed under title 32, chapter 8, 13, 14, 17, 19.1, 25 or 29 or a comparable law of another state.
   2. (b) A registered nurse practitioner as defined in section 32-1601.
   3. (c) The United States department of veterans affairs, as evidenced by a disability award letter.
2. 2. "Federal house price index" means the average measure of movement of single-family house prices in the United States published by the federal housing finance agency, or its successor, for this state.
3. 3. "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.
4. 4. "Person with a total and permanent disability" means a person who is unable to engage in any substantial gainful activity, for pay or profit, by reason of any physical or mental impairment that is expected to last for a continuous period of at least twelve months or result in death within twelve months as certified by a competent medical authority.

5. 5. "Veteran" means an individual who has served in, and been discharged, separated or released under honorable conditions from, active or inactive service in the uniformed services of the United States, including:

   1. (a) All regular, reserve and national guard components of the United States army, navy, air force, marine corps and coast guard.
   2. (b) The commissioned corps of the national oceanic and atmospheric administration.
   3. (c) The commissioned corps of the United States public health service.
   4. (d) A nurse in the service of the American red cross or in the army and navy nurse corps.
   5. (e) Any other civilian service that is authorized by federal law to be considered active military duty for the purpose of laws administered by the United States secretary of veterans affairs.