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ARIZONA HOUSE OF REPRESENTATIVES57th Legislature, 2nd Regular Session |
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HB 2804: rural affordable housing; tax credits
Sponsor: Representative Martinez, LD 16
Committee on Rural Economic Development
Overview
Establishes the Rural Development and Housing Tax Credit.
History
Individual income tax is levied on an Arizona resident's taxable income at a single tax rate of 2.5 percent. Corporate income tax is levied on a corporation 's taxable income at 4.9 percent. The calculation of Arizona individual income tax begins with the federal adjusted gross income and the corporate income tax begins with federal taxable income, which are then subject to various additions, subtractions and deductions. Statute also authorizes various tax credits that reduce a taxpayer's income tax liability (A.R.S. Title 43, Chapters 10 and 11).
Provisions
Rural Development and Housing Tax Credit
1. Establishes the rural development and housing tax credit administered by the Arizona Department of Housing. (Sec. 3)
2. Instructs ADOH to allocate tax credits for projects that:
a. are wholly located within a county with a population of less than 800,000 persons;
b. qualify for the federal low-income housing tax credit; and
c. are placed in service after June 30, 2027 in an amount that the department determines is necessary for the economic feasibility of the qualified project. (sec. 3)
3. Specifies the credit is allowed in the first six taxable years during the federal credit period. (sec. 3)
4. Requires ADOH to:
a. allocate tax credits according to the department's current qualified allocation plan;
b. prescribe forms, procedures and criteria for applying, evaluating and qualifying for the credit; and
c. issue an eligibility statement for each qualified project that identifies the qualified project, the allocation year and the amount of the credits allocated to the project. (Sec. 3)
5. Directs ADOH, for calendar years 2026 through 2036, to allocate a total of $2,000,000 of tax credits in any calendar year according to the date of the allocation of the credit. (Sec. 3)
6. Prohibits a credit allocated in calendar year 2026 from being claimed until the federal fiscal year beginning October 1, 2027. (Sec. 3)
7. Specifies an approved amount applies against the dollar limit for the year in which the application is submitted. (Sec. 3)
8. Directs any unused balances that are under the dollar limit be reallocated in the following year. (Sec. 3)
9. Stipulates a taxpayer that owns an interest in an investment in a qualified project that receives an eligibility statement from ADOH is allowed a tax credit provided the taxpayer acquires the interest before filing a tax return claiming the tax credit. (sec. 3)
10. requires the taxpayer to apply the credit against the taxpayer's insurance premium or income tax liability. (sec. 1)
11. Instructs ADOH, with DIFI and ADOR, to adopt rules and publish and prescribe forms and procedures as necessary to administer the tax credit. (Sec. 3)
12. Requires ADOH, by July 30 of each year, to hold a public hearing to solicit and accept public comments relating to the amount of the credit to be used for qualified projects and other rural development and housing tax credit issues. (Sec. 3)
13. Instructs ADOH to submit a report that addresses whether the credits produced a significant number of additional affordable housing units and that analyzes the economic impact of the credits on Arizona. (Sec. 3)
14. Repeal the rural development and housing tax credit January 1, 2037. (Sec. 4)
Miscellaneous
15. Stipulates a taxpayer is allowed a credit against the premium tax liability, individual income tax or corporation income tax provided the ADOH issues an eligibility statement for a qualified project. (Sec. 1, 6, 8)
16. Specifies the amount of the tax credit. (Sec. 1, 6, 8)
17. Requires the taxpayer, to claim the credit, to submit the eligibility statement provided by ADOH to the respective agency with the taxpayer's tax return. (Sec. 1, 6, 8)
18. Allows the unused portion of the tax credit to be carried forward for up to five consecutive taxable years. (Sec. 1, 6, 8)
19. Stipulates if the federal low-income housing tax credit with respect to the qualified project is subject to recapture, then the applicable tax credit is also subject to recapture in a proportion amount from all taxpayers that claimed the credit. (Sec. 1, 6, 8)
20. Requires the applicable agencies in reference to the tax credit to adopt rules and publish and prescribe forms and procedures as necessary to administer the tax credit. (Sec. 1, 6, 8)
21. Declares a taxpayer the claims a tax credit against the state premium tax liability is not required to pay any additional retaliatory tax and may fully offset any retaliatory tax imposed in accordance with statute. (Sec. 1)
22. Contains a purpose statement and saving clause. (Sec. 10, 12)
23. Makes the legislation retroactive to taxable years beginning January 1, 2026. (Sec.11)
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27. Initials PB HB 2804
28. 2/2/2026 Page 0 Rural Economic Development
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