SB1142

THE CONTEXT: The Internal Revenue Code provides a new credit for an individual s qualified contribution to a SGO that provides qualified elementary and secondary scholarships ( Section 25F of the Internal Revenue Code ). H.

WHAT THE BILL DID: The final vetoed version would establish that Arizona elects to participate in the federal tax credit for individuals who make qualified contributions to SGOs, require the Department of Revenue (DOR) to comply with all federal laws and regulations to administer this federal tax credit to ensure Arizona is eligible to participate in taxable years beginning January 1, 2027, and annually submit all the required information to the United States Secretary of the Treasury for participation, and allow a nonprofit organization in Arizona that is exempt or that has applied for exemption from federal taxation can apply to DOR for certification as a scholarship granting organization.

WHY IT MATTERED: The practical reason for this bill was to create an operative state process for federal tax credit instead of leaving implementation undefined. It would establish that Arizona elects to participate in the federal tax credit for individuals who make qualified contributions to SGOs, and would also require the Department of Revenue (DOR) to comply with all federal laws and regulations to administer this federal tax credit to ensure Arizona is eligible to participate in taxable years beginning January 1, 2027, and annually submit all the required information to the United States Secretary of the Treasury for participation, rather than leave the current rule unchanged.