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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
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HB 2939: child care; subsidies; tax credits
Sponsor: Representative Livingston, LD 28
Committee on Appropriations
Overview
Establishes premium, individual and corporate income tax credits for insurers, small businesses and corporations that incur qualified childcare expenditures. Creates the Out-of-School Time Grant Program (Program) within the Department of Economic Security (DES) to expand out-of-school time childcare for children. Appropriates $3,000,000 from the General Fund (GF) in FYs 2026 through FY 2030 to the Out-of-School Time Grant Program Fund (Fund).
History
At the election of any corporate taxpayer operating a for-profit childcare facility, any expenditure made to purchase, construct, renovate or remodel childcare facilities or equipment will be allowable as a subtraction ratably over a period of 60 months, beginning with the month in which the property is placed in service.
At the election of a taxpayer operating a childcare facility within this state primarily for the children of the taxpayer's employees, any expenditure made to acquire, construct, renovate or remodel the childcare facility or equipment will be allowable as a subtraction ratably over a period of 24 months, beginning with the month in which the property is placed in service.
The provided subtraction will be in place of any allowance for the exhaustion, wear and tear of such property used in a trade or business or of property held for the production of income, including a reasonable allowance for obsolescence under the Internal Revenue Code (A.R.S. § 43-1130).
Provisions
Childcare Premium Tax Credit
1. Allows an insurer to claim a premium tax credit for qualified childcare expenditures (premium tax credit) incurred by the insurer during the tax year. (Sec. 2)
2. Caps the premium tax credit at 25% of the taxpayer's qualified childcare expenditures or $100,000, whichever is less. (Sec. 2)
3. Outlines application requirements for an insurer to receive the premium tax credit. (Sec. 2)
4. Provides a five-year carryforward if the amount of the premium tax credit exceeds the taxpayer's premium tax liability. (Sec. 2)
5. Declares that a taxpayer who claims the premium tax credit may not be required to pay any additional retaliatory tax imposed because the taxpayer claimed the credit. (Sec. 2)
6. Allows the Department of Insurance and Financial Institutions (DIFI), in cooperation with DOR, to adopt rules and publish and prescribe forms and procedures necessary to administer the premium tax credit. (Sec. 2)
7. Repeals the premium tax credit on July 1, 2030. (Sec. 3)
Small Business/Corporation Childcare Tax Credit
8. Establishes, for Tax Years 2026-2030, an individual and corporate income tax credit (income tax credit) for qualified childcare expenditures incurred by a taxpayer that is a small business or a corporation. (Sec. 7, 9)
9. Caps the income tax credit for small businesses at 50% of the taxpayer's qualified childcare facilities expenditures plus 20% of the taxpayer's qualified childcare resource and referral expenditures or $100,000, whichever is less. (Sec. 7)
10. Caps the income tax credit for corporations at 25% of the taxpayer's qualified childcare facilities expenditures plus 10% of the taxpayer's qualified childcare resource and referral expenditures or $100,000, whichever is less. (Sec. 9)
11. Directs DOR to preapprove the income tax credits and cap the annual amount at $1,000,000 per fiscal year. (Sec. 7, 9)
12. Prohibits a taxpayer from taking more than one of the income tax credits and the premium tax credit. (Sec. 7, 9)
13. Outlines application requirements for the income tax credit. (Sec. 7, 9)
14. Establishes procedures for DOR when approving or denying a taxpayer's request for the income tax credit. (Sec. 7, 9)
15. Outlines requirements a taxpayer must fulfill to receive the income tax credit. (Sec. 7, 9)
16. Stipulates that if an income tax credit is claimed for the costs of acquiring, constructing, rehabilitating or expanding a qualified childcare facility and the taxpayer ceases to operate the facility, the taxpayer must repay the credit on a ratable basis. (Sec. 7, 9)
17. Outlines procedures for the repayment. (Sec. 7, 9)
18. Specifies that repayment is not required if a person acquiring a taxpayer's interest in a qualified childcare facility agrees in writing to assume the taxpayer's repayment liability. (Sec. 7, 9)
19. Prohibits a taxpayer from claiming this income tax credit and the income tax subtraction for the amortization of the cost of childcare facilities. (Sec. 7, 9)
20. Provides a five-year carryforward if the amount of the credit exceeds the other taxes due on the claimant's income. (Sec. 7, 9)
21. Allows co-owners, partners, members of a limited liability company and stockholders to each claim only the pro rata share of the income tax credit based on ownership interest. (Sec. 7, 9)
22. Authorizes DOR to adopt rules and publish and prescribe forms and procedures as necessary to administer the income tax credit. (Sec. 7, 9)
23. Outlines reporting requirements for DOR and DIFI. (Sec. 1, 7, 9)
24. Subjects the income tax credit to review by the Joint Legislative Income Tax Credit Review Committee. (Sec. 6)
25. Defines qualified childcare expenditure as any amount paid or incurred for:
a) Acquiring, constructing, rehabilitating or expanding property in this state that is:
i. to be used as part of a qualified childcare facility for the taxpayer;
ii. is eligible for the income tax subtraction amortization of the costs for the childcare facility; and
iii. is not part of the principal resident of the taxpayer or any employee of the taxpayer.
b) operating costs of a qualified childcare facility of the taxpayer, including costs related to employee training, scholarship programs and increasing compensation for employees with higher levels of childcare training. (Sec. 7, 9)
26. Repeals the income tax credit on July 1, 2030. (Sec. 8, 10)
Out-of-School Time Grant Program
27. Establishes the Program within DES to expand out-of-school time childcare for children who are 5 to 12 years old who require childcare when the children are out of school or when school instruction is not being conducted. (Sec. 4)
28. Outlines requirements for the Program. (Sec. 4)
29. Requires DES to:
a) develop an annual grant application process for participating in the Program;
b) provide grants to assist with the costs of childcare to eligible grantees;
c) monitor eligible grantees to ensure compliance; and
d) develop metrics to measure the success of the Program. (Sec. 4)
30. Establishes the Fund. (Sec. 4)
31. Appropriates $3,000,000 from the GF in FYs 2026 through FY 2030 to the Fund. (Sec. 12)
32. Outlines reporting requirements for the department of DES. (sec. 4)
33. Repeals the Program on July 1, 2030. (Sec. 5)
Miscellaneous
34. Contains a purpose statement. (Sec. 11)
35. Declares that this act may be known as the 'Working Families Child Care Act.' (Sec. 13)
36. Defines terms. (Sec. 4, 7, 9)
37. Makes technical changes. (Sec. 1)
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41. HB 2939
42. Initials JB Page 0 Appropriations
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