Ducey proposes Arizona earned income tax credit

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In his final budget speech to lawmakers, Arizona Governor Doug Ducey pitches the idea of ​​creating a state-based tax refund for working parents, similar to the federal income tax credit won.

Ducey presented his $14.25 billion budget to lawmakers on Friday. The 500-page spending plan includes $74 million for a 5% state earned income tax credit targeting low-income households with children and jobs.

Ducey’s aides said Friday morning the plan would cost eligible taxpayers an average of $128 a year and benefit about 577,000 taxpayers in the state. Families with more dependents would receive more and the amount would decrease to a cap of about $50,000 of annual income.

Legislators offers a similar appropriation in the previous legislative session.

According to According to the National Conference of State Legislatures, about two dozen states have some form of earned income tax credit, but not all of them are refundable, meaning you can’t get back more than you can. pay in taxes.

Ducey’s budget also includes $58 million for “industrial tax competitiveness.” According to the Tax Foundation, Arizona ranks 20th for overall business climate with the 10th overall industrial corporate tax rate.

Ducey’s office estimated Friday that the state, one of the few to fully recover from job losses from the COVID-19 pandemic, will see $1.3 billion more in revenue next year than the state. current exercise which ends this summer. The increase in revenue represents an increase of approximately 20% over the previous budget year. Aides added that the office expects $215 million in funds carried over from the current fiscal year.

Ducey’s $14 billion budget assumes funds from Proposition 208, a ballot initiative that adds a 3.5% tax surtax to personal income over $250,000, will not be in the next budget since the issue was largely struck down as unconstitutional by the Arizona Supreme Court last year.

The plan also boosts the state’s rainy day fund to just over $1 billion, Ducey’s office said. The spending plan sends $425 million to the Arizona Fiscal Stabilization Fund.

The list of recommendations is now in the hands of lawmakers, who will consider Ducey’s proposals in their budget-making process in the coming months.


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