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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
personal property exemption; money proceeds
Purpose
Exempts all, rather than only the refundable portion of, federal or state Earned Income Tax Credits (EITCs) and any federal or state Child Tax Credits from specified actions to collect a debt.
Background
Statute outlines
personal property exemptions from the bankruptcy process and other actions to
collect from a debtor. The exemptions include specified amounts of money or
proceeds. Laws
2022, Chapter 346 exempts the refundable portion of federal or state EITCs
and federal or state Child Tax Credits and sets the exemption amount at the
lesser of either: 1) the total combined amount of any federal and state tax
refunds; or 2) the total combined amount of any federal or state EITCs and any
federal or state Child Tax Credits claimed on the return (A.R.S. Title 33,
Chapter 8, Article 2 and A.R.S.
§ 33-1125).
The federal EITC provides a refundable tax credit against individual income tax liability for a low-income or moderate-income individual or family. The amount of the federal EITC is based on a taxpayer's marital status, adjusted gross income and number of qualifying children and is fully refundable (26 U.S.C. § 32).
The federal Child Tax Credit provides a refundable tax credit against individual income tax liability for a taxpayer with a qualifying child or children. The maximum amount of the federal Child Tax Credit is $2,000 per qualifying child and up to $1,400 is refundable for each qualifying child (26 U.S.C. § 24).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Exempts all, rather than only the refundable portion of, federal and state EITCs and Child Tax Credits from execution, attachment or sale on any process issued from any court or other judicial remedy provided for the collections of debts.
2. Makes technical and conforming changes.
3. Becomes effective on the general effective date.
Prepared by Senate Research
February 6, 2025
MG/KP/ci