Assigned to FIN FOR
COMMITTEE
Assigned to FIN FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
tax exemptions; dependents; inflation indexing
Purpose
Indexes the tax exemption for dependents to inflation.
Background
Current law allows a subtraction from Arizona gross income equivalent to the exemption for blind persons, persons over 65 years of age and dependents. The exemption is available for each dependent of the taxpayer and every person over 65 for whom the taxpayer provides assisted living or other healthcare arrangements. The allowable exemption for dependents and persons over 65 is currently $2,300 (A.R.S. §§ 43-1022 and 43-1023).
Dependent is defined as having the same meaning as under the Internal Revenue Code, which defines it as a qualifying child or a qualifying relative. A qualifying child is an individual who meets requirements on age, familial relationship to the taxpayer and residence in relation to the taxpayer. A qualifying relative is an individual who is not a qualifying child and meets requirements on familial relationship to the taxpayer and financial dependence upon the taxpayer (26 U.S.C. § 152).
Laws 1993, 2nd Special Session, Chapter 9 increased the value of the exemption for dependents from $2,100 to its current level of $2,300.
There may be a negative fiscal impact to the state General Fund associated with this legislation, due to an increase in the allowable tax exemption for dependents.
Provisions
1. Increases the allowable individual income tax exemption for each dependent from $2,300 to:
a) $2,350 in Tax Year 2019;
b) $2,400 in Tax Year 2020; and
c) an amount adjusted according to the average annual change in the Metropolitan Phoenix Consumer Price Index beginning in Tax Year 2021 and each year thereafter.
2. Makes technical changes.
3. Becomes effective on the general effective date.
House Action
WM 1/31/18 DP 6-3-0-0
3rd Read 2/14/18 34-25-1
Prepared by Senate Research
February 26, 2018
FB/AF/lb