Assigned to FIN FOR COMMITTEE
*pending committee assignment
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
FACT SHEET FOR S.B. 1542
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