earned income; tax credit

HB 2685 creates a $350 state earned income tax credit for Arizona residents who qualify for the federal Earned Income Tax Credit (EITC). It directly affects low-income individuals and families by providing a refundable tax credit that can be claimed on state income tax returns, with one credit allowed per household annually. The bill requires claimants to file the credit with their tax return (except for those with no tax liability who meet specific filing exceptions) and allows excess credit amounts to be paid as refunds. This credit applies retroactively to taxable years beginning after December 31, 2024.