Budget & Taxes (Tax Credits)

HB 2836 creates two separate Arizona state tax credits for charitable contributions: one for general charitable organizations (up to $400 for singles/$800 for couples) and another for foster care charities (up to $500 for singles/$1,000 for couples). To qualify, organizations must provide services to specific groups including low-income residents, individuals with chronic illnesses, and seniors at risk of financial fraud/cybercrime, and must certify compliance with these criteria. The credit limits adjust annually based on inflation starting in 2023, and taxpayers must provide donation details to the state. This bill directly affects Arizona taxpayers who donate to qualifying charities and the charities themselves, which must meet strict service and certification requirements.

HB 2694 creates a new tax credit for Arizona small businesses that provide health reimbursement arrangements (HRAs) to employees. It allows businesses with 1-50 employees to claim a $400 tax credit per employee covered by an individual coverage HRA, provided they contribute at least $400 per employee annually. Unused credits can be carried forward for up to five years. The credit applies to taxable years beginning after December 31, 2026, and is defined using federal HRA regulations. This directly affects small employers seeking to offset costs of providing employee health benefits.

Arizona's HB 2004 creates a new "Family Support Tax Credit" for eligible residents with children. It provides up to $4,000 per qualifying child for married couples filing jointly (or $2,000 for single filers) when claiming the credit, with an additional $4,000 (or $2,000) if the parent completed a parenting course during pregnancy. The credit amount phases out for households earning more than 115% of the federal poverty level, reducing to 50% for incomes between 115%-130% of the poverty level. This credit applies to Arizona tax returns filed by legal residents meeting income thresholds, effective for taxable years beginning after December 31, 2025.