income tax; credit; child care

HB4135 - 572R - I Ver

REFERENCE TITLE:
income tax; credit; child care

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 4135

Introduced by

Representatives
Luna-N�jera: Biasiucci, Carter N, Carter P, Connolly, Contreras L, Gutierrez,
Hernandez A, Hernandez C, Lopez, Martinez, Pe�a, Stahl Hamilton, Tsosie,
Volk, Wilmeth;� Senators Diaz, Fernandez, Gonzales

AN
ACT

amending sections 43-222 and 43-323,
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:

START_STATUTE
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.
END_STATUTE

Sec. 2. Section 43-323, Arizona Revised
Statutes, is amended to read:

START_STATUTE
43-323.

Place and form of filing returns

A. All returns required by this title shall be in
such a form as the department may from time to time prescribe and shall be
filed with the department.

B. The department shall prescribe a short form
return for individual taxpayers who:

1. Are eligible and elect to pay tax based on the
optional tax tables pursuant to section 43-1012.

2. Elect to claim the optional standard deduction
pursuant to section 43-1041, subsection A, but not the increased amount
for charitable deductions under section 43-1041, subsection I.

3. Elect not to file for credits against income tax
liability other than those contained in sections 43-1072, 43-1072.01,
43-1072.02, 43-1073
,

and

43-1073.01
and 43-1080
.

4. Are not required to add any income under section
43-1021 and do not elect any subtractions under section 43-1022,
except for the exemptions allowed under section 43-1023.

C. The department may provide a simplified return
form for individual taxpayers who:

1. Are eligible and elect to pay tax based on the
optional tax tables pursuant to section 43-1012.

2. Are residents for the full taxable year.

3. File as single individuals or married couples
filing joint returns under section 43-309.

4. Are not sixty-five years of age or older or
blind at the end of the taxable year.

5. Claim no exemptions under section 43-1023
for the taxable year.

6. Elect to claim the optional standard deduction
under section 43-1041, subsection A, but not the increased amount for
charitable deductions under section 43-1041, subsection I.

7. Are not required to add any income under section
43-1021 and do not elect to claim any subtractions under section 43-1022
or file for any credits under chapter 10, article 5 of this title, except the
credits provided by sections 43-1072.01, 43-1072.02
,

and
43-1073
, 43-1073.01 and
43-1080
.

8. Do not elect to contribute a portion of any tax
refund as provided by any provision of chapter 6, article 1 of this title.�
Notwithstanding any provision of chapter 6, article 1 of this title, a
simplified return form under this subsection shall not include any space for
the taxpayer to so contribute a portion of a refund.

D. The department shall prepare blank forms for the
returns and furnish them on request.� Failure to receive or secure the form
does not relieve any taxpayer from making any return required.

E. An individual income tax preparer who prepares
more than ten original income tax returns that are timely filed during any
taxable year that begins from and after December 31, 2017 shall file
electronically all individual tax returns prepared by that tax preparer, for
that taxable year and each subsequent taxable year.� An individual income tax
preparer may not charge a separate fee to the taxpayer for filing a return
using the department's electronic filing program.� This subsection does not
apply if the taxpayer elects to have the return filed on paper or if the return
cannot be filed electronically for reasons outside of the tax preparer's
control.

F. Fiduciary returns, partnership returns,
withholding returns and corporate returns shall be filed electronically for
taxable years beginning from and after December 31, 2019, or when the
department establishes an electronic filing program, whichever is
later. Any person who is required to file electronically pursuant to
this subsection may apply to the director, on a form prescribed by the
department, for an annual waiver from the electronic filing requirement.� The
director may grant the waiver, which may be renewed for one subsequent year, if
any of the following applies:

1. The taxpayer has no computer.

2. The taxpayer has no internet access.

3. Any other circumstance considered to be worthy by
the director exists.

G. A waiver is not required if the return cannot be
electronically filed for reasons beyond the taxpayer's control, including
situations in which the taxpayer was instructed by either the internal revenue
service or the department of revenue to file by paper.
END_STATUTE

Sec. 3. Title 43, chapter 10, article 5,
Arizona Revised Statutes, is amended by adding section 43-1080, to read:

START_STATUTE
43-1080.

Credit for child care expenses; definition

A. For taxable years beginning from
and after December 31, 2025, a credit is allowed against the taxes imposed by
this title for each qualified child of a taxpayer as provided by this section.

B. The amount of the credit is:

1. $2,000 for each qualified child of
a taxpayer whose federal adjusted gross income for the taxable year is $75,000
or less.

2. $1,000 for each qualified child of
a taxpayer whose federal adjusted gross income for the taxable year is more
than $75,000 but less than $150,000.

C. If the allowable amount of a tax
credit under this section exceeds the taxes otherwise due under this title for
the taxable year, after applying all other credits to which the claimant may be
entitled and after any setoff under section 42-1122, the excess shall be
paid in the same manner as a refund under section 42-1118.

D. Credits are allowed under this
section on a first-come, first-served basis. The department may not
authorize credits under this section that exceed in the aggregate a total of
$15,000,000.

E. For the purposes of this section,
"qualified child" means a taxpayer's dependent child who is five
years of age or younger as of December 31 of the taxable year and who receives
child care services through a family child care home or in-home provider
that is certified by the department of economic security pursuant to section 46-807
and that implements a curriculum that aligns with other early child hood
learning programs.��
END_STATUTE

Sec. 4.
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 working families obtain
quality child care in this state.

Sec. 5.
Short title

This act may be cited as the
"Arizona Working Families and Quality Care Act".