HB 2685 creates a new Arizona individual income tax credit for taxpayers who qualify for the federal earned income tax credit under section 32 of the Internal Revenue Code. The credit amount is set at $350 per taxable year. The bill requires the Arizona Department of Revenue to provide claim forms with individual income tax returns and generally requires the credit to be claimed on a filed return, while allowing certain nonfilers with no tax liability to claim it through the form process.
The bill also limits the credit to one claimant per household per year and makes the credit refundable, meaning any amount that exceeds the taxpayer’s liability is paid out as a refund. In addition, the bill amends the state’s income tax credit review schedule so the new credit will be reviewed in years ending in 0 and 5. The legislation states its purpose is to provide an economic benefit to low-income persons and families, and it applies retroactively to taxable years beginning after December 31, 2024.
Impact
HB 2685 would add a new refundable state earned income tax credit to Arizona law in Title 43, section 43-1073.02, and would also update section 43-222 to place the new credit on the Joint Legislative Income Tax Credit Review Committee’s review schedule. The measure would affect low-income working taxpayers who qualify for the federal EITC, potentially reducing their state income tax burden or generating a refund if the credit exceeds tax owed. It would also impose administrative duties on the Department of Revenue to distribute claim forms and process claims under the new credit structure.
Sentiment
Based on the bill text and available context, the measure appears to be framed positively as a targeted tax benefit for low-income workers and families. The stated purpose emphasizes economic relief, and the bill has bipartisan-looking sponsorship, including multiple House members and two senators. No committee transcript or vote record is available in the provided materials, so there is no documented opposition or recorded debate to indicate broader legislative sentiment beyond the bill’s supportive framing.
Contention
The main policy questions raised by the bill are likely to center on the fiscal cost of creating a refundable credit, the size of the benefit relative to state revenue impacts, and the eligibility and filing rules for claiming it. The one-claimant-per-household limit and the requirement to qualify for the federal earned income tax credit may also be points of administrative or policy discussion. Because no committee discussion or vote history is provided, there is no specific recorded contention from named legislators or stakeholder groups in the available materials.