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REFERENCE TITLE: tax credit; health reimbursement arrangement |
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State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026
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HB 2694 |
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Introduced by Representative Livingston
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AN ACT
amending section 43-222, Arizona Revised Statutes; amending title 43, chapter 10, article 5, Arizona Revised Statutes, by adding section 43-1080; relating to individual income tax credits.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-222, Arizona Revised Statutes, is amended to read:
43-222. 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, 43-1088, 43-1089.04, 43-1167.01 and 43-1175.
2. For years ending in 1 and 6, sections 43-1072.02, 43-1074.02, 43-1075, 43-1076.01, 43-1077, 43-1078, 43-1080, 43-1083, 43-1083.02, 43-1162, 43-1164.03 and 43-1183.
3. For years ending in 2 and 7, sections 43-1073, 43-1082, 43-1085, 43-1086, 43-1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1164, 43-1165, and 43-1181.
4. For years ending in 3 and 8, sections 43-1074.01, 43-1168, 43-1170 and 43-1178.
5. For years ending in 4 and 9, sections 43-1073.01, 43-1081.01, 43-1083.03, 43-1084, 43-1164.04, 43-1164.05 and 43-1184.
Sec. 2. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1080, to read:
43-1080. Credit for individual coverage health reimbursement arrangement; definition
A. For taxable years beginning from and after December 31, 2026, a credit is allowed against the taxes imposed by this title for a taxpayer that:
1. Employs at least one and not more than fifty employees, cumulatively and regardless of an employee's length of tenure during the taxable year.
2. Provides an individual coverage health reimbursement arrangement to the taxpayer's employees.
3. contributes at least $400 for each employee to the individual coverage health reimbursement arrangement during the taxable year.
B. The amount of the credit is equal to $400 multiplied by the number of employees who received health care benefits under the individual coverage health reimbursement arrangement during the taxable year.
C. If the allowable credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
D. Co-owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
E. The department may request that a taxpayer that claims a credit under this section provide necessary information to support the amount of the credit the taxpayer is claiming. The department may not authorize the credit UNTIL the requested information is received.
F. For the purposes of this section, "Individual coverage health reimbursement arrangement" means a health reimbursement arrangement as prescribed in 45 code of federal regulations section 146.123.
Sec. 3. Purpose
Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts section 43-1080, Arizona Revised Statutes, as added by this act, to support small businesses that provide an individual coverage health reimbursement arrangement to their employees.