income tax; additional rate; schools

SB1800 - 572R - I Ver

REFERENCE TITLE:
income tax; additional rate; schools

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1800

Introduced by

Senator
Epstein

AN
ACT

amending title 41, chapter 56, article 1,
Arizona Revised Statutes, by adding section 42-5706; repealing section 43-1011,
Arizona Revised Statutes, as amended by laws 2021, chapter 411, section 4;
amending Title 43, chapter 10, article 2, Arizona Revised Statutes, by adding
section 43-1015; relating to individual income tax.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Title 41, chapter 56, article 1,
Arizona Revised Statutes, is amended by adding section 41-5706, to read:

START_STATUTE
41-5706.

K-12 infrastructure fund

A. The K-12 infrastructure fund
is established consisting of monies deposited pursuant to section 43-1015.�
The division shall administer the fund. Monies in the fund are
continuously appropriated and are exempt from the provisions of section 35-190
relating to lapsing of appropriations.

B. The DEPARTMENT shall use the
monies in the fund to pay for public school buildings and building renewal
pursuant to this chapter.

C. Monies in the fund shall be used
to supplement, not supplant, any existing monies from any other source for
public school buildings and building renewal.
END_STATUTE

Sec. 2.
Repeal

Section 43-1011, Arizona Revised
Statutes, as amended by Laws 2021, chapter 411, section 4, is repealed.

Sec. 3. Title 43, chapter 10, article 2,
Arizona Revised Statutes, is amended by adding section 43-1015, to read:

START_STATUTE
43-1015.

Income tax; additional tax rate increment; adjustment

A. Subject to subsection C of this
section, for taxable years beginning from and after December 31, 2026, in
addition to the tax rate prescribed by section 43-1011, an additional tax
rate increment is imposed and shall be collected.� The additional tax rate
increment is levied at a rate of two and six tenths percent of the taxpayer's
federal adjusted gross income that exceeds $1,000,000.

B. Subject to subsection C of this
section, a taxpayer that paid an amount that is equal to six and two tenths
percent of the taxpayer's federal adjusted gross income or more in transaction
privilege and use tax under title 42, chapter 5 during the taxable year is
exempt from the additional tax rate increment prescribed by subsection A of
this section for that taxable year. A taxpayer claiming the
exemption under this subsection shall submit to the department receipts and
other supporting documentation demonstrating the amount of transaction
privilege and use tax paid pursuant to title 42, chapter 5.

C. For taxable years beginning from
and after December 31, 2031 and every fifth year thereafter, The department
shall adjust the percentage prescribed by subsection B of this section to match
the percentage of transaction privilege tax paid by taxpayers in the median
quintile of income tax brackets in this state as reported by a nonprofit,
nonpartisan tax policy organization that specializes in tax and economic
policy.

D. Notwithstanding sections 42-1116
and 43-206, the department shall separately account for revenues
collected pursuant to this section and deposit those revenues in the K-12
infrastructure fund established by section 41-5706.���
END_STATUTE

Sec. 4.
Legislative intent

The legislature intends to:

1. Establish a dedicated
revenue source to reach the goal of fully and consistently repairing all public
school district buildings so they are structurally sound and equipped with
fully operational heating, ventilation and air conditioning, plumbing and
electrical and sound systems.�

2. Support all public
district schools in providing safe and appropriate rooms for learning physical
education, music, art and laboratory science that are appropriate for the age
of the students.

3. Help students meet the
Arizona state learning standards.

4. Require taxpayers whose
income is over $1,000,000 to pay the top income tax rate of five and one-tenths
percent on income over $1,000,000, which was the income tax rate in effect in
1998. The base income tax rate of two and one-half percent prescribed by
section 43-1011, Arizona Revised Statutes, plus the additional tax rate
increment of two and sixth-tenths percent prescribed by section 43-1015,
Arizona Revised Statutes, as added by this act, produces a total income tax
rate of five and one-tenths percent.

Sec. 5.
Short title

This act may be cited as the
"Billionaires Should Pay for the Infrastructure They Use Act".

Sec. 6.
Requirements for enactment; two-thirds vote

Pursuant to article IX, section 22,
Constitution of Arizona, this act is effective only on the affirmative vote of
at least two-thirds of the members of each house of the legislature and is
effective immediately on the signature of the governor or, if the governor
vetoes this act, on the subsequent affirmative vote of at least three-fourths
of the members of each house of the legislature.