Assigned to ED AS PASSED BY COW
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR H.B. 2290
apprenticeship program; income tax subtraction
Purpose
Establishes the Arizona Student Apprenticeship Program (Apprenticeship Program) and an
individual and corporate income tax subtraction for participating employers (employers) through
December 31, 2030. Requires an employer to deposit designated monies in an interest-bearing
account on behalf of a participating employee (participant's account) for disbursement on program
completion. Prescribes student eligibility criteria and administration requirements.
Background
The Department of Economic Security's Arizona Apprenticeship Office serves as the state
registration agency for the U.S. Department of Labor (U.S. DOL) Apprenticeship Program. DES
and U.S. DOL apprenticeship programs provide for progressively increasing wages consistent with
the skill acquired and may be competency-based, time-based or hybrid. Time-based apprenticeship
programs offer at least 144 hours of annual organized technical instruction and 2,000 hours of
on-the-job training before program completion. Apprenticeship programs must have an eligible
age of at least 16 years old and outline other minimum qualifications for persons entering the
program (29 C.F.R. § 29.5).
Individual income tax is levied on Arizona residents' taxable income using a graduated rate
structure based on income level. The tax base begins with Arizona gross income which is equivalent
to the taxpayer's federal adjusted gross income (AGI). Statute authorizes various amounts to be
added or subtracted when computing an individual's AGI (A.R.S. §§ 43-1021 – 43-1023). Arizona
gross income for a corporation is the same as the corporation's federal taxable income for the
taxable year. To determine a corporation's Arizona taxable income, the Arizona gross income is
adjusted by additions and subtractions of certain expenses and income (A.R.S. §§ 43-1101;
43-1121; and 43-1122).
The Joint Legislative Budget Committee fiscal note estimates the income tax deductions
will decrease state General Fund revenues by $30,000 in FY 2024 which would be the first
full-year impact following Apprenticeship Program implementation. The fiscal note also states
that ADE estimates a need for $200,000 and one additional full-time equivalent position for
administering the Apprenticeship Program (JLBC fiscal note).
Provisions
1. Establishes the Apprenticeship Program within the Arizona Department of Education (ADE)
to provide job training and economic opportunity to high school students in Arizona. FACT SHEET – Amended
H.B. 2290
Page 2
2. Directs ADE to develop application procedures, selection criteria and completion
requirements.
3. Allows any employer in Arizona to apply to participate in the Apprenticeship Program by
submitting an application to ADE.
4. Requires Apprenticeship Program employers to:
a) provide each participant employee with job training;
b) provide flexible scheduling to each participant employee so that the participant may attend
classes;
c) open a separate, interest-bearing participant's account;
d) deposit, in the participant's account, the portion of wages the participant employee
designates for deposit; and
e) deposit, each time the employer deposits the designated wages in the participant's account,
an equivalent amount of monies in the account.
5. Directs a participating employee to designate at least 10 percent of their wages to be deposited
in the participant's account.
6. Directs an employer to disburse to the participant:
a) if the participant employee successfully completes the ADE-prescribed Apprenticeship
Program requirements, the entire amount of monies in the participant's account; or
b) if the participant employee does not complete the Apprenticeship Program requirements,
an amount equal to the participant's wages deposited in the account.
7. Allows an employer to retain an amount equal to the matching employer deposits to the account
of a participant who does not complete Apprenticeship Program requirements.
8. Requires the employer to transmit to the State Treasurer for deposit in the state General Fund
any interest on matching employer deposits not disbursed to the participant employee.
9. Repeals the Apprenticeship Program on January 1, 2031.
10. Allows an employer, for the first taxable year in which an employee successfully completes
the Apprenticeship Program in taxable years 2023 through 2030, to subtract an amount equal
to the matching employer deposits disbursed to participant employees during that year from
the following:
a) Arizona AGI for the purposes of individual income tax; or
b) Arizona gross income for the purposes of corporate income tax.
11. Requires ADE to issue a certificate to the employer to provide to the Arizona Department of
Revenue to verify the employer's participation in the Apprenticeship Program and any
participant employees' completion.
12. Directs ADE to prepare a list of all employers that have been accepted to participate in the
Apprenticeship Program and post the list on its website.
FACT SHEET – Amended
H.B. 2290
Page 3
13. Requires a student, to be eligible for Apprenticeship Program participation, to:
a) be enrolled in an Arizona public high school;
b) apply to the public school in which the student is enrolled in an ADE-prescribed form;
c) submit proof with the application that the student is projected to complete high school
graduation requirements by the end of grade 12; and
d) submit proof that the student has received an employment offer from an employer on
ADE's participating employers list.
14. Requires ADE to deny the application of a student if Apprenticeship Program participation
will interfere with a student's ability to complete high school graduation requirements by the
end of grade 12.
15. Specifies that the Apprenticeship Program is separate and apart from the U.S. DOL
Apprenticeship Program.
16. Defines participant employee and program.
17. Makes technical changes.
18. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Repeals the Apprenticeship Program on January 1, 2031.
2. Sets taxable years 2023 though 2030 as the timeframe for which a qualifying employer may
use the individual and corporate Apprenticeship Program income tax subtractions.
3. Makes conforming changes.
House Action Senate Action
ED 2/1/22 DP 7-3-0-0 ED 3/22/22 DP 5-3-0
APPROP 2/7/22 W/D FIN 5/25/22 W/D
3
rd
Read 2/24/22 32-27-1
Prepared by Senate Research
June 6, 2022
LB/slp