HB 2984 allows Arizona residents to claim a credit against their state sales tax for tribal taxes paid on the same sales or business income within the same period. The credit amount is limited to the state tax owed minus the taxpayer's share of local government distributions. If eligible, the state distributes one-twelfth of the credit amount directly to qualifying tribes, which must use these funds to support tribal colleges or postsecondary institutions on their reservations. The bill specifies annual spending limits: $1.75 million per tribal college and $875,000 for additional technical colleges on the same reservation. This directly benefits tribal colleges operating on reservations in Arizona.
HB 4037 creates a new refundable education tax credit for Arizona taxpayers with qualifying children. The credit (up to 80% of the state's base support level) applies to children not enrolled in public school or scholarship programs for more than 50% of instructional days. Taxpayers can claim this credit starting tax year 2026, with excess credit paid as a refund. The bill also modifies income tax filing procedures to streamline forms for eligible taxpayers and requires electronic filing for tax preparers handling over 10 returns annually.
HB 2987 creates a new state income tax credit for owners rehabilitating certified historic structures in Arizona. It establishes a $30 million annual tax credit limit (increasing to $60 million after 2035) for projects meeting federal rehabilitation standards, requiring a cost-benefit analysis proving positive economic impact. The state historic preservation officer certifies projects based on a point system evaluating job growth, economic impact, and community support, with 60% of funds reserved for projects in cities/towns under 150,000 residents. Property owners must grant a restrictive covenant to preserve the structure for 24 months after certification, and larger projects require certified public accountant verification.
HB 4135 creates a new child care tax credit for Arizona taxpayers with children under five who use certified child care providers. The credit provides $2,000 per child for families with federal adjusted gross income of $75,000 or less, and $1,000 for incomes between $75,000 and $150,000 annually. A total of $15 million in credits is available each year on a first-come, first-served basis, with excess credits paid as refunds. The credit applies to tax returns filed for 2026 and later, supporting working families seeking quality early childhood care.
This bill allows Arizona to participate in a federal tax credit program, enabling individuals to claim a credit for contributions to qualified scholarship organizations. Starting in 2027, certified Arizona scholarship groups can provide funds for elementary and secondary education expenses, such as tuition or materials, under federal law. The state’s Department of Education must certify these organizations, maintain a public list of them, and submit annual reports to the federal government to maintain eligibility. The bill does not create new scholarships but aligns Arizona with existing federal tax incentives for education-related donations.
HB 2747 would allow Arizona small businesses to subtract certain federal hiring credits from their state taxable income. Specifically, it adds a new subtraction for amounts claimed under federal work opportunity credits, empowerment zone credits, and other similar programs. This directly affects small businesses that qualify for these federal credits and file Arizona income tax returns. The change would reduce their Arizona tax liability by the amount of those federal credits, without altering the federal credit rules themselves.
HB 2644 creates a new tax credit for Arizona taxpayers investing in affordable housing projects that qualify for federal low-income housing tax credits. It allows investors to claim credits against their insurance premium tax liability (not income tax), with a $10 million annual cap for projects meeting federal standards, administered by the Arizona Department of Housing. The credit is allocated based on project eligibility statements, can be shared among investors regardless of ownership stake, and expires after 2031. Taxpayers must submit documentation with their tax returns, and unused credits may be carried forward for up to five years. The bill requires annual reporting on housing impacts but does not change income tax rates or directly affect renters.
Arizona's HB 2804 creates a new tax credit to support rural affordable housing development. It allows taxpayers (primarily developers or investors in qualifying projects) to claim a credit against their state insurance premium tax for projects in counties with under 800,000 residents that also qualify for federal low-income housing tax credits. The credit amount matches the state's allocation for each project, capped at $2 million annually through 2036, and requires an eligibility statement from the Arizona Department of Housing. Taxpayers can offset the credit against premium tax liability, carry forward unused portions for up to five years, and the program includes annual reporting requirements for the department.
HB 2553 authorizes Arizona to participate in a federal tax credit program (under Internal Revenue Code section 25F) that allows individuals to claim a tax credit for contributions to certified scholarship organizations. It requires the Arizona Department of Education to certify nonprofit scholarship organizations meeting federal standards and maintain a public list of certified organizations by January 1 each year. Starting December 31, 2026, these certified organizations may provide scholarships for elementary or secondary education expenses to eligible students, in alignment with federal law. The bill directly affects Arizona residents who contribute to scholarship programs and the nonprofit organizations administering them.
SB 1371 creates a new income tax credit program in Arizona for businesses expanding or locating "qualified facilities" (like manufacturing plants) within the state. To qualify, businesses must make new capital investments, create jobs paying at least 125% of the median wage (100% in rural areas), and provide health insurance covering 65% of premiums. The credit equals 10% of qualifying investments, paid as $200,000-$300,000 per new job over five years, with annual limits of $125 million total and $30 million per business. This directly affects qualifying businesses seeking tax incentives for facility investments and job creation in Arizona.
