SB1172 - 541R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 43-222, Arizona Revised Statutes, is amended to read:

START_STATUTE43-222. Income tax credit review schedule

The joint legislative income tax credit review committee shall review the following income tax credits:

1. For years ending in 0 and 5, sections 43‑1079.01, 43‑1087, 43‑1088, 43-1089.04, 43‑1167.01 and 43‑1175.

2. For years ending in 1 and 6, sections 43‑1072.02, 43‑1074.02, 43‑1083, 43‑1083.02, 43‑1164.03 and 43‑1183.

3. For years ending in 2 and 7, sections 43‑1073, 43‑1080, 43‑1085, 43‑1086, 43‑1089, 43‑1089.01, 43‑1089.02, 43-1089.03, 43‑1164, 43‑1169 and 43‑1181.

4. For years ending in 3 and 8, sections 43‑1074.01, 43‑1081, 43‑1168, 43‑1170 and 43‑1178.

5. For years ending in 4 and 9, sections 43‑1073.01, 43‑1076, 43‑1081.01, 43‑1083.04, 43‑1084, 43‑1162, 43‑1164.05, 43‑1170.01 and 43‑1184 and, beginning in 2019, sections 43‑1083.03 and 43‑1164.04. END_STATUTE

Sec. 2. Section 43-1023, Arizona Revised Statutes, is amended to read:

START_STATUTE43-1023. Exemptions for blind persons, persons over sixty‑five years of age and dependents

A. A taxpayer is allowed an exemption of one thousand five hundred dollars $1,500:

1. For a taxpayer who is blind or if either the taxpayer's central visual acuity does not exceed 20/200 in the better eye with correcting lenses or the taxpayer's visual acuity is greater than 20/200 but is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than twenty degrees.

2. For the taxpayer's spouse if a separate return is made by the taxpayer, and if the spouse is blind, as defined described in paragraph 1 of this subsection, has no Arizona adjusted gross income for the calendar year in which the taxable year of the taxpayer begins and is not the dependent of another taxpayer. For the purposes of this paragraph, the determination of whether the spouse is blind shall be made at the close of the taxable year of the taxpayer. If the spouse dies during such the taxable year, the determination shall be made as of the time of the spouse's death.

B. A taxpayer is allowed an exemption of two thousand three hundred dollars $2,300 for:

1. Each dependent of the taxpayer, as defined in section 43‑1001.

2. Each person age sixty‑five or older regardless of the person's relationship to the taxpayer:

(a) If the taxpayer pays more than one‑fourth of the total cost of maintaining such the person in a nursing care institution or residential care institution licensed pursuant to title 36, chapter 4, or an assisted living facility provider of a type certified pursuant to title 11, chapter 2, article 7, if such the payments exceed eight hundred dollars $800 in the taxable year.

(b) If the taxpayer otherwise makes payments exceeding eight hundred dollars $800 in the taxable year for home health care or other types of medical care.

3. For taxable years beginning from and after December 31, 2003, each birth for which a certificate of birth resulting in stillbirth has been issued pursuant to section 36‑330 if the child otherwise would have been a member of the taxpayer's household. The taxpayer may claim the exemption under this paragraph only in the taxable year in which the stillbirth occurred.

C. For taxable years beginning from and after December 31, 1998, a resident taxpayer is allowed an exemption of ten thousand dollars $10,000 for each parent or ancestor of a parent of the taxpayer, who is age sixty‑five or older, who requires assistance with activities of daily living and who lives in the taxpayer's principal residence for the entire taxable year, if the taxpayer pays more than one‑half of the person's total support and maintenance costs. An exemption under this subsection is in lieu of:

1. An exemption under subsection B of this section for the same person.

2. A credit under section 43‑1073.01 with respect to the same person for the same year. This paragraph does not preclude a taxpayer from claiming both an exemption under this section and a carryover credit under section 43‑1073.01 with respect to the same person in the same year.

D. A taxpayer shall not take more than one exemption for the same person under either subsection B or C of this section.

E. A taxpayer is allowed an exemption of two thousand one hundred dollars $2,100:

1. If the taxpayer has attained the age of sixty‑five before the close of the taxable year filing a separate or joint return and the taxpayer is not claimed as a dependent by another taxpayer.

2. For the taxpayer's spouse if the spouse has attained the age of sixty‑five before the close of the taxable year, a joint return is filed and the spouse is not a dependent of another taxpayer. END_STATUTE

Sec. 3. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1073.01, to read:

START_STATUTE43-1073.01. Family caregiver income tax credit; definitions

A. For taxable years beginning from and after December 31, 2019 and ending before January 1, 2023, and subject to the terms and conditions of this section, a credit is allowed against the taxes imposed by this chapter for a taxpayer who incurs qualifying expenses during the taxable year for caring for and supporting a qualifying family member in the taxpayer's home.

B. To qualify for the credit under this section:

1. the taxpayer must file a return as a resident of this state.

2. The taxpayer's Arizona gross income, together with any Arizona gross income of each qualifying family member, in the taxable year may not exceed:

(a) $75,000 in the case of a single person or a married person filing separately.

(b) $150,000 in the case of a married couple filing a joint return.

3. The taxpayer must incur qualifying expenses during the taxable year for the care of one or more qualifying family members.

4. The taxpayer must submit with the claim for the credit the qualifying family member's name, taxpayer identification number and relationship to the taxpayer.

C. The amount of the credit is equal to fifty percent of the qualifying expenses incurred during the taxable year but not more than:

1. In the case of a single taxpayer or head of a household, $1,000 for each qualifying family member.

2. In the case of a husband and wife filing a joint return, $1,000 for each qualifying family member. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed for a joint return.

D. For the purposes of this section:

1. Qualifying expenses must relate directly to caring for or supporting a qualifying family member and include:

(a) Improving or altering the taxpayer's primary residence, whether owned or rented by the taxpayer, to enable or assist the qualifying family member to be mobile, safe or independent.

(b) Purchasing or leasing equipment to enable or assist the qualifying family member to carry out one or more daily living activities.

(c) Acquiring other goods, services or support to assist the taxpayer in caring for the qualifying family member, including employing a home care aide or personal care attendant or securing adult day care, legal or financial services or assistive care technology.

2. Qualifying expenses do not include:

(a) Regular food, clothing or transportation expenses or gifts provided to the qualifying family member.

(b) Ordinary household maintenance or repair that is not directly related to and necessary for the care of the qualifying family member.

(c) Any amount that is paid or reimbursed by insurance or by the federal government, this state or a political subdivision of this state.

3. If more than one taxpayer qualifies for a credit under this section with respect to the same qualifying family member in the same taxable year, the amount of the credit, within the limits prescribed by subsection C of this section, shall be apportioned between or among the qualifying taxpayers according to the respective expense amounts incurred.

E. A taxpayer who claims a credit under this section is not eligible to claim a credit under this section again for three consecutive taxable years, except that if the amount of the allowable credit in a taxable year exceeds the taxes otherwise due under this title, or if there are no taxes due under this title, the taxpayer may carry the unused amount of the credit forward for not more than three consecutive taxable years. Thereafter, any unused amount of the credit is waived and may not be refunded, transferred or otherwise used to offset taxes.

F. A credit under this section is in lieu of an exemption under section 43-1023, subsection C with respect to the same person in the same year. This subsection does not preclude a taxpayer from claiming both a carryover credit under this section and an exemption under section 43‑1023, subsection C with respect to the same person in the same year.

G. Before filing a tax return and claiming a credit under this section, a taxpayer must submit a credit application to the department, on an electronic form prescribed by the department, for certification of the credit. The department shall certify applications for the credit as follows:

1. The department may accept credit applications beginning from and after January 1 through January 15 of the year following the calendar year for which the credit is being requested.

2. The department shall determine which credit applications to certify by using a random number generator to assign a unique, random number to all applications that are eligible for inclusion. The department shall then place credit Applications in numerical order from lowest to highest and certify the applications in numeric order from lowest to highest until the maximum amount specified in paragraph 3 of this subsection is reached.

3. The department may not certify credits under this section that exceed in the aggregate a dollar amount of $500,000 for any calendar year. Failure to claim a certified credit for any reason has no effect on other applications that were denied.

4. The department shall notify a taxpayer on or before February 15 following the calendar year for which the credit is being requested whether the taxpayer's credit application is certified or denied.

5. Certification under this subsection verifies that the application is timely and specifies the portion of the credit limit that is reserved for the taxpayer's claim. Certification of the credit is not a certification of the accuracy of the claim and does not preclude a future audit of the credit.

H. For the purposes of this section:

1. "qualifying family member" means an individual who meets all of the following requirements:

(a) Is at least eighteen years of age during the taxable year.

(b) Requires assistance with one or more daily living activities as certified by a physician who is licensed pursuant to title 32, chapter 13 or 17.

(c) Is the taxpayer's spouse or the taxpayer's or spouse's CHILD, GRANDCHILD, stepchild, parent, stepparent, GRANDPARENT, sibling, uncle or aunt, whether of the whole or half blood or by adoption.

2. "random number generator" means technology that generates a sequence of numbers that cannot be reasonably predicted better than by random chance. END_STATUTE

Sec. 4. Delayed repeal; carryforward

Section 43-1073.01, Arizona Revised Statutes, as added by this act, is repealed from and after June 30, 2023, except that the repeal does not affect any credit amounts authorized to be carried forward beyond the repeal date.

Sec. 5. Purpose

Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts section 43-1073.01, Arizona Revised Statutes, as added by this act, to mitigate the costs incurred by taxpayers who provide unreimbursed care in their homes for a qualifying adult family member who requires assistance in daily living activities.