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BILL # HB 2011 |
TITLE: individual income tax; subtraction; adoption |
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SPONSOR: Kupper |
STATUS: As Introduced |
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PREPARED BY: Benjamin Newcomb |
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The introduced version of HB 2011 would expand the current individual income subtraction for unreimbursed adoption expenses to include human embryo adoption. The maximum subtraction for married couples filing jointly is $10,000 while the limit for other filers is $5,000. Human embryo adoption is the process of receiving frozen fertilized embryos that have been donated to a fertility clinic. Under the bill, the human embryo is considered adopted only in the year in which the legal transfer of the embryo occurs. The bill has a general effective date. For this reason, we assume that HB 2011 would go into effect in the 2026 taxable year, which would impact General Fund revenue collections, beginning in FY 2027.
Estimated Impact
We estimate the bill would reduce General Fund revenue by about $(10,000) annually, beginning in FY 2027. Since data on the number of donated embryo recipients is sparse, this estimate is uncertain.
Our estimate assumes the following:
1) According to a study published in the American Journal of Obstetrics and Gynecology in March 2023, there were 2,492 donated embryo transfers in the U.S. in 2019, the latest year for which we have been able to find such data.
2) Based on Arizona's portion of the U.S. population, we estimate there were about 55 donated embryo transfers in the state.
3) The Arizona Department of Health Services reports that approximately 44.9% of births in Arizona were to unmarried women. Applying this percentage to the number of donated embryo transfers, 30 transfers were to married couples and 25 were to unmarried individuals.
4) While the cost of embryo adoption varies by clinic, it typically exceeds the maximum allowable subtraction for adoption expenses, which is $10,000 for married joint filers and $5,000 for all other taxpayers.
5) Assuming each embryo recipient claims the full subtraction, we estimate that $400,000 would be deducted from Arizona gross income each year.
6) Based on an individual income tax rate of 2.5%, the subtraction would lower General Fund collections by $(10,000) annually, starting in FY 2027.
7) Urban Revenue Sharing distributions to cities and towns will be reduced by $(2,000) annually starting in FY 2029.
1/28/26