HB2373 • 2026

income tax; refunds; veterans' organizations

HB2373 - income tax; refunds; veterans' organizations

Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Stacey Travers, Quantá Crews, Brian Garcia, Gail Griffin, Rachel Keshel, Aaron Márquez, David Marshall, Sr., Teresa Martinez, Quang H Nguyen, Jeff Weninger
Last action: 2026-03-10
Official status: Senate second read
Effective date: Not listed

Plain English Breakdown

The bill summary does not specify how much taxpayers can donate or what happens if they designate more than their refund amount.

Income Tax Refunds for Veterans' Organizations

HB2373 requires Arizona taxpayers to have the option to designate a portion of their income tax refunds as voluntary contributions to veterans' organizations.

What This Bill Does

Requires ADOR to provide a space on individual income tax returns for taxpayers to voluntarily contribute to veterans' organizations.
Establishes a separate subaccount within the Veterans' Donations Fund to collect these designated amounts.
Directs ADOR to subtract designated amounts from taxpayers' refunds and transfer them to ADVS for deposit in the fund.
Requires ADVS to annually allocate funds from this subaccount to veterans' organizations that meet specific criteria.

Who It Names or Affects

Arizona taxpayers who file individual income tax returns.
Veterans' service organizations qualified under Section 501(c)(19) of the U.S. Internal Revenue Code.
The Arizona Department of Revenue and the Department of Veterans' Services.

Terms To Know

501(c)(19) veterans' organization: A non-profit group that supports veterans, where at least 75% of its members are past or present military service members.
Veterans' Donations Fund: A fund managed by the Arizona Department of Veterans' Services to support various veteran-related programs and initiatives.

Limits and Unknowns

The bill does not specify how much taxpayers can donate.
It is unclear what happens if a taxpayer designates more than their refund amount.
The effectiveness date for the new provisions is January 1, 2027.

Bill History

2026-03-10 Senate
Senate second read
2026-03-09 Senate
Senate Rules: None
2026-03-09 Senate
Senate Finance: None
2026-03-09 Senate
Senate first read
2026-03-02 Senate
Transmitted to Senate
2026-03-02 House
House third read passed
2026-02-24 House
House minority caucus
2026-02-24 House
House majority caucus
2026-02-23 House
House consent calendar
2026-01-21 House
House second read
2026-01-20 House
House Rules: C&P
2026-01-20 House
House Ways & Means: DP
2026-01-20 House
House first read

Official Summary Text

HB2373 - 572R - Senate Fact Sheet

Assigned to
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COMMITTEE

ARIZONA STATE SENATE

Fifty-Seventh
Legislature, Second Regular Session

FACT SHEET FOR
H.B. 2373

income tax; refunds;
veterans' organizations

Purpose

Requires the
Arizona Department of Revenue (ADOR) to provide a space on the individual
income tax return form in which a taxpayer may voluntarily contribute to a 501(c)(19)
veterans' organization. Requires the Director of the Arizona Department of
Veterans' Services (ADVS) to establish a separate subaccount within the Veterans'
Donations Fund (Fund) to collect the taxpayer contributions.

Background

Current statute
requires a space on the individual income tax return form in which the taxpayer
may designate an amount of the taxpayer's refund as a voluntary contribution to
the Fund. A taxpayer may also donate any amount to the Fund, in lieu of or in
addition to the designated portion of the tax refund, by an appropriate
indication on the return and by including that amount with the return.

The Director of
ADVS may solicit donations from the public for veterans and the donations may
be used for the benefit of veterans in Arizona. The Fund consists of monies,
gifts and contributions donated to the ADVS and monies from license plate
purchases and individual income tax return contributions. The Fund consists of
separate subaccounts for: 1) the construction and maintenance of the Enduring
Freedom Memorial; 2) grants to women veterans in Arizona;

3) need-based scholarships to children of U.S. military members. ADVS must
annually transfer 15 percent of all revenues received by ADVS that are
deposited in the Fund to the State Homes for Veterans Trust Fund (A.R.S. ��
41-608

and
43-620
).

A veterans'
organization exempt under Section 501(c)(19) of the U.S. Internal Revenue Code
(U.S. IRC) must be either: 1) a post or organization of which at least 75
percent of the members are past or present members of the U.S. Armed Forces; 2)
an auxiliary unit or society of a post or organization; or 3) a trust or
foundation of a post or organization. A veteran's organization exempt under
Section 501(c)(3) of the U.S. IRC must be organized and operated exclusively
for outlined purposes, including charitable purposes, and the earnings of the
organization may not benefit any private shareholder or individual (
26
U.S.C. � 501
).

There is no
anticipated fiscal impact to the state General Fund associated with this
legislation.

Provisions

1.

Requires ADOR

to provide a space on the
individual income tax return form in which a taxpayer may designate an amount
of the taxpayer's refund as a voluntary contribution to the Fund to be
allocated to a 501(c)(19) veterans' organization.

2.

Requires ADOR,

after subtracting any
setoff for debts, to subtract the designated amount from the taxpayer's refund
and transfer the amount to the ADVS for deposit in the Fund.

3.

Allows a taxpayer to donate any amount to the Fund to be allocated to a
501(c)(19) veterans' organization by an appropriate indication on the return
and by including that amount within the return.

4.

Requires the Director of ADVS to establish a separate subaccount in the Fund
to deposit individual income tax return contributions.

5.

Requires the Director of ADVS to annually allocate monies from the established
subaccount to a 501(c)(19) veterans' organization.

6.

Requires ADOR to determine the initial administrative cost of
implementing a voluntary contribution box on individual income tax returns for
contributions to veterans' organizations and report the amount to ADVS.

7.

Requires ADVS to transfer the administrative cost reported by ADOR to
the state General Fund.

8.

Applies the outlined veterans' service organization subaccount and
donation procedures to taxable years beginning January 1, 2027.

9.

Makes technical and conforming changes.

10.

Becomes
effective on the general effective date.

House Action

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Prepared by Senate Research

March 18, 2026

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Current Bill Text

Read the full stored bill text

HB2373 - 572R - H Ver

House Engrossed

income tax; refunds;
veterans' organizations

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2373

AN
ACT

amending section 41-608, Arizona
Revised Statutes; amending title 43, chapter 6, article 1, Arizona Revised
Statutes, by adding section 43-623; relating to individual income tax
refunds.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 41-608, Arizona Revised
Statutes, is amended to read:

START_STATUTE
41-608.

Veterans' donations fund; subaccounts; transfer; grants

A. The veterans' donations fund is established
consisting of monies, gifts and contributions donated to the department and
monies deposited pursuant to sections 28-2414, 28-2428, 28-2431,
28-2447, 28-2454, 28-2470.10, 28-2473, 28-2474, 28-2475,
28-2476
,

and
43-620
and 43-623
. The department shall administer
the fund. Monies in the fund are continuously appropriated.� The
monies in the fund are exempt from the provisions of section 35-190
relating to lapsing of appropriations. The department shall annually
transfer fifteen percent of all revenues received by the department that are
deposited in the veterans' donations fund pursuant to this section to the
subaccount established pursuant to section 41-608.01 in the state homes for
veterans trust fund. The department shall adopt rules or policies
for grants of less than $5,000 that encourage as much competition as
practicable.

B. The director or the director's designee may
solicit and receive donations, including in-kind donations, from the
public for veterans. The director shall deposit, pursuant to
sections 35-146 and 35-147, the monetary donations in the veterans'
donations fund.� Monies in the fund are subject to state auditing procedures.�
Except for monies deposited pursuant to sections 28-2431 and 28-2447,
the donations may be used for the benefit of the veterans within this state as
grants, subject to chapter 24 of this title, if applicable.

C. The director shall establish a separate
subaccount in the veterans' donations fund for the deposit of monies received
pursuant to section 28-2431, subsection C. The monies in the
subaccount shall be used for the construction and maintenance of the enduring
freedom memorial authorized pursuant to section 41-1363 for placement in
Wesley Bolin Plaza.

D. The director shall establish a separate
subaccount in the veterans' donations fund for the deposit of monies received
pursuant to section 28-2447, subsection F.� The monies in the subaccount
shall be used for the benefit of women veterans in this state, including
providing shelter to homeless women veterans as grants, subject to chapter 24
of this title, if applicable.

E. The director shall establish a separate
subaccount in the veterans' donations fund for the deposit of monies received
pursuant to section 28-2454, subsection C. The first $32,000
in the subaccount shall be reimbursed to the person that provides the $32,000
pursuant to section 28-2454, subsection A. The director shall
annually allocate monies from the subaccount to a foundation that is qualified
under section 501(c)(3) of the
United States
internal
revenue code for federal income tax purposes and that is the nation's oldest
and largest provider of need-based scholarships to children of United States
military members. The foundation must:

1. Have been in existence for at least fifty-two
years.

2. Have provided more than thirty-three thousand
scholarships that are valued at almost $90,000,000.

3. Have a mission that includes honoring marines and
educating their children.

4. Award scholarship monies to children of marines
and navy corpsmen who were killed or wounded in combat or who have demonstrated
financial need.

F. The director shall establish a separate
subaccount in the veterans' donations fund for the deposit of monies received
pursuant to section 28-2470.10, subsection C. The first
$32,000 in the subaccount shall be reimbursed to the person that provides the
$32,000 pursuant to section 28-2470.10, subsection A. The
director shall annually allocate monies from the subaccount to a foundation
that is qualified under section 501(c)(3) of the
United States

internal revenue code for federal income tax purposes.� The foundation must:

1. Have been in existence for at least twenty years.

2. Have a mission that includes providing college
scholarships to:

(a) The sons and daughters of those who have served
the United States honorably as soldiers in the United States army.

(b) The spouses of enlisted soldiers on active duty
in the United States army.

3. Envision increasing its fundraising and
visibility to encourage more applicants to apply for scholarships and to
provide larger scholarships to an increasing number of deserving applicants to
both:

(a) Reward army families for the sacrifices that
army soldiers make every day to serve their nation.

(b) Help the spouses and children of army soldiers
become leaders in society.

4. Award scholarship monies to:

(a) Children of former United States army members
who were killed while serving in the United States army or who received an
honorable discharge or medical discharge.

(b) Children of United States army members in good
standing serving in regular active duty, active duty reserve or active duty
national guard.

(c) Spouses of United States army members in good
standing serving in regular active duty, active duty reserve or active duty
national guard.

G. The director shall establish a
separate subaccount in the veterans' donations fund for the deposit of monies
received pursuant to section 43-623. The director shall
annually allocate monies from the subaccount to a veterans' service
organization that is qualified under 501(
c
)(19) of the
internal revenue code for federal income tax purposes.

G.
H.
The
director shall inventory and account for the use of any tangible personal
property donated to the fund.

H.
I.
The
department may use up to $150,000 from the veterans' donations fund each fiscal
year to administer this section.� In addition to any other full-time
equivalent positions authorized by law, the department is authorized two full-time
equivalent positions to administer this section.

I.
J.
On
notice from the director, the state treasurer shall invest and divest monies in
the fund as provided by section 35-313, and monies earned from investment
shall be credited to the fund.
END_STATUTE

Sec. 2. Title 43, chapter 6, article 1, Arizona
Revised Statutes, is amended by adding section 43-623, to read:

START_STATUTE
43-623.

Contribution to veterans' service organization fund

A. The department shall provide a
space on the individual income tax return form in which a taxpayer may
designate an amount of the taxpayer's refund as a voluntary contribution to the
veterans' donations fund established by section 41-608 to be allocated to
a veterans' service organization that is qualified under 501(
c
)(19) of the internal revenue code.

B. After subtracting any setoff for
debts pursuant to section 42-1122, the department of revenue shall
subtract the designated amount from the refund due the taxpayer and transfer it
to the department of veterans' services for deposit in the veterans' donations
fund established by section 41-608. The department of revenue shall
determine the initial administrative cost of this section and report that
amount to the department of veterans' services. The department of veterans'
services shall transfer that amount to the state general fund.

C. The taxpayer may also donate any
amount to the veterans' donations fund established by section 41-608 to be
allocated to a veterans' service organization by an appropriate indication on
the return and by including that amount with the return.

END_STATUTE

Sec. 3.
Applicability

This act applies to taxable years
beginning from and after December 31, 2026.