Arizona ~ Multiple Taxes: Personal Exemptions Increased and Indexed; Seldom or Unused Tax Credits Repealed

CCH Tax Day Report

Legislation has been enacted that increases and indexes the personal exemptions for Arizona individual income tax purposes for taxable years beginning after 2016, and repeals seldom or unused corporate income, individual income, and insurance premium tax credits after December 31, 2017.

Personal Exemptions

The personal exemption for a single taxpayer (currently, $2,100) is increased for the 2017 taxable year to $2,150 and for the 2018 taxable year to $2,200. For a married couple or a head of household, the personal exemption (currently, $4,200) is increased for the 2017 taxable year to $4,300 and for the 2018 taxable year to $4,400. For a married couple that claims at least one dependent, the personal exemption (currently, $6,300) is increased for the 2017 taxable year to $6,450 and for the 2018 taxable year to $6,600. For taxable years beginning after 2018, the Department of Revenue must adjust the personal exemption amounts according to the average annual change in the Metropolitan Phoenix Consumer Price Index.

Repealed Credits

The following seldom or unused tax credits are repealed:

— ecological restoration workforce training;

— renewable energy operations;

— solar liquid fuel research and development;

— solar plumbing stub outs and electric vehicle recharge outlets;

— military reuse zone; and

— premium credit for domestic stock life or disability insurer.

Also, the portion of the credit for renewable energy investment and production for self-consumption that applies to investments in renewable energy for use in a manufacturing facility is repealed. The credit can still be claimed for investments in renewable energy for use in an international operations center.

In addition, except as noted below, if any income tax credit is unclaimed for four consecutive years, the Director of the Department of Revenue must:

— terminate the recognition and servicing of the credit;

— issue a public announcement, including an announcement on its website, of the credit’s termination;

— notify the Governor’s Office of Strategic Planning and Budgeting, the President of the Senate, the Speaker of the House of Representatives, the Joint Legislative Budget Committee, and the Legislative Council; and

— include the repeal of all credit-related statutes in technical tax correction legislation in the following legislative session. If the Legislature fails to enact the legislation, the director must rescind the termination of the credit.

The director may not terminate the recognition and servicing of any income tax credit that is subject to preapproval by the Arizona Commerce Authority unless over four consecutive years the department has not received notice of preapproval of any applicant or project for the credit and the credit was not claimed by or allowed to any taxpayer.

H.B. 2528, Laws 2017, effective as noted

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