Assigned to FIN AS PASSED BY COMMITTEE
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR S.B. 1116
tax credit; foster care organizations
Purpose
Retroactive to taxable years beginning January 1, 2022, requires the amount of the Credit
for Contribution to Qualifying Charitable Organizations and the Credit for Contribution to
Qualifying Foster Care Charitable Organizations to be annually adjusted for inflation. Expands the
definition of qualified individual.
Background
Statute allows an individual tax credit for voluntary cash contributions to: 1) a qualifying
foster care charitable organization of up to $500 for a single individual or head of household or
$1,000 for a married couple filing jointly; and 2) a qualifying charitable organization of up to $400
for a single individual or head of household or $800 for a married couple filing jointly. A taxpayer
may contribute to either or both types of organizations and claim a credit for either or both credits.
A qualifying charitable organization is a 501(c)(3) nonprofit organization or a designated
community action agency that receives Community Services Block Grant Program monies. A
qualifying charitable organization must spend at least 50 percent of its annual budget on services
to: 1) Arizona residents who receive Temporary Assistance for Needy Families benefits;
2) low-income Arizona residents and their households; or 3) Arizona residents who have a chronic
illness or physical disability. A qualifying charitable organization must provide a signed, written
certification to the Arizona Department of Revenue that includes verification of the organization’s
federal participation status and financial data on the prior year's budget spent on qualifying
services.
A qualifying foster care charitable organization is a qualifying charitable organization
that also: 1) provides services to at least 200 qualified individuals in Arizona; and 2) spends at
least 50 percent of its budget on services to qualified individuals in Arizona. A qualified individual
is a child placed in a foster home or child welfare agency or a person who is under 21 years old
and is participating in a transitional living program (A.R.S. § 43-1088).
If expanding the definition of a qualified individual and adding an annual inflation
adjustment result in additional approved claims or an increase to the amount of the Credit for
Contribution to Qualifying Charitable Organizations or the Credit for Contribution to Qualifying
Foster Care Charitable Organizations, there may be a fiscal impact to the state General Fund.
Provisions
1. Expands the definition of qualified individual by removing the age requirement for a person
participating in a transitional independent living program and adding a person who is:
a) participating in an independent living program; FACT SHEET – Amended
S.B. 1116
Page 2
b) participating in an extended foster care program; or
c) under 27 years old whose reason for leaving foster care is:
i. reaching 18 years old;
ii. adoption or legal guardianship after reaching 16 years old; or
iii. reunification at 14 years old or 15 years old.
2. Requires the Arizona Department of Revenue to adjust the amount of the Credit for
Contribution to Qualifying Charitable Organizations and the Credit for Contribution to
Qualifying Foster Care Charitable Organizations according to the annual change in the
metropolitan Phoenix Consumer Price Index.
3. Prohibits the dollar amount of the credits from being revised below the amounts allowed in the
prior taxable year and requires the amount to be raised to the nearest whole dollar.
4. Makes technical and conforming changes.
5. Becomes effective on the general effective date, retroactive to taxable years beginning
January 1, 2022.
Amendments Adopted by Committee
1. Removes the expansion of the Credit for Contribution to Qualifying Foster Care Charitable
Organizations.
2. Adds an annual inflation adjustment for the Credit for Contribution to Qualifying Charitable
Organizations and the Credit for Contribution to Qualifying Foster Care Charitable
Organizations.
Senate Action
FIN 1/26/22 DPA 8-2-0
Prepared by Senate Research
January 26, 2022
MG/slp