SB 1331 — veterans' income tax; exemption

SB1331 - 551R - IS Ver       REFERENCESenate TITLE:Engrossed   veterans' income tax;

veterans'exemption income  tax;      State of Arizona Senate Fifty-fifth Legislature First Regular Session     SENATE BILL 1331       AN ACT   amending section 43-1022, Arizona Revised Statutes;

exemption         State of Arizona Senate Fifty-fifth Legislature First Regular Session     SB 1331   Introduced by Senators Gowan:

Barto, Borrelli, Kerr, Leach, Livingston, Pace, Rogers, Shope     AN ACT   amending section 43‑1022, Arizona Revised Statutes;

Section 1.  SectionSection 1. 43-1022, Arizona Revised Statutes, is amended to read:

START_STATUTE43-1022.  SubtractionsSection from43-1022, Arizona grossRevised incomeStatutes, Inis computingamended Arizonato adjustedread: gross income, the following amounts shall be subtracted from Arizona gross income:

1.  TheSTART_STATUTE43-1022. amount of exemptions allowed by section 43‑1023.

2.  Benefits,Subtractions annuitiesfrom andArizona pensionsgross inincome anIn amountcomputing totalingArizona notadjusted moregross thanincome, $2,500the receivedfollowing fromamounts oneshall orbe moresubtracted offrom theArizona following:gross income:

(a)  The1. United States government service retirement and disability fund, the United States foreign service retirement and disability system and any other retirement system or plan established by federal law, except retired or retainer pay of the uniformed services of the United States that qualifies for a subtraction under paragraph 27 of this section.

(b)  TheThe Arizonaamount state retirement system, the corrections officer retirement plan, the public safety personnel retirement system, the elected officials' retirement plan, an optional retirement program established by the Arizona board of regentsexemptions underallowed section 15‑1628, an optional retirement program established by a community college district board under section 15‑145143-1023. or a retirement plan established for employees of a county, city or town in this state.

3.  A2. beneficiary's share of the fiduciary adjustment to the extent that the amount determined by section 43‑1333 decreases the beneficiary's Arizona gross income.

4.  InterestBenefits, incomeannuities received on obligations of the United States, minus any interest on indebtedness, or other related expenses, and deductedpensions in arrivingan atamount Arizonatotaling grossnot income,more thatthan were$2,500 incurredreceived orfrom continuedone to purchase or carrymore suchof obligations.the following:

5.  The(a) excessThe ofUnited aStates partner'sgovernment shareservice ofretirement incomeand requireddisability tofund, bethe includedUnited underStates sectionforeign 702(a)(8)service retirement and disability system and any other retirement system or plan established by federal law, except retired or retainer pay of the internaluniformed revenueservices codeof over the incomeUnited requiredStates tothat bequalifies includedfor undera chaptersubtraction 14,under articleparagraph 227 of this title.section.

6.  The(b) excessThe ofArizona astate partner'sretirement sharesystem, ofthe partnershipcorrections lossesofficer determinedretirement pursuantplan, tothe chapterpublic 14,safety articlepersonnel 2retirement ofsystem, thisthe titleelected overofficials' retirement plan, an optional retirement program established by the lossesArizona allowableboard of regents under section 702(a)(8)15-1628, an optional retirement program established by a community college district board under section 15-1451 or a retirement plan established for employees of thea internalcounty, revenuecity code.or town in this state.

7.  The3. amount allowed by section 43‑1025 for contributions during the taxable year of agricultural crops to charitable organizations.

8.  TheA portionbeneficiary's share of any wages or salaries paid or incurred by the taxpayerfiduciary foradjustment the taxable year that is equal to the amountextent of the federal work opportunity credit, the empowerment zone employment credit, the credit for employer paid social security taxes on employee cash tips and the Indian employment credit that the taxpayeramount receiveddetermined underby sectionssection 45A,43-1333 45B,decreases 51(a) and 1396 of the internalbeneficiary's revenueArizona code.gross income.

9.  The4. amount of exploration expenses that is determined pursuant to section 617 of the internal revenue code, that has been deferred in a taxable year ending before January 1, 1990 and for which a subtraction has not previously been made.  The subtraction shall be made on a ratable basis as the units of produced ores or minerals discovered or explored as a result of this exploration are sold.

10.  TheInterest amountincome includedreceived inon federalobligations adjustedof grossthe incomeUnited pursuantStates, tominus sectionany 86interest ofon theindebtedness, internalor revenueother code,related relatingexpenses, toand taxationdeducted ofin socialarriving securityat andArizona railroadgross retirementincome, benefits.that were incurred or continued to purchase or carry such obligations.

11.  To5. the extent not already excluded from Arizona gross income under the internal revenue code, compensation received for active service as a member of the reserves, the national guard or the armed forces of the United States, including compensation for service in a combat zone as determined under section 112 of the internal revenue code.

12.  TheThe amountexcess of unreimburseda medicalpartner's andshare hospital costs, adoption counseling, legal and agency fees and other nonrecurring costs of adoptionincome notrequired to exceedbe $3,000. included Inunder thesection case702(a)(8) of athe husbandinternal andrevenue wifecode whoover file separate returns, the subtractionincome mayrequired beto taken by either taxpayer or may be dividedincluded between them, but the total subtractions allowed both husband and wife shall not exceed $3,000.  The subtraction under thischapter paragraph14, mayarticle be2 takenof for the costs that are described in this paragraphtitle. and that are incurred in prior years, but the subtraction may be taken only in the year during which the final adoption order is granted.

13.  The6. amount authorized by section 43‑1027 for the taxable year relating to qualified wood stoves, wood fireplaces or gas fired fireplaces.

14.  TheThe amountexcess byof which a netpartner's operatingshare lossof carryoverpartnership orlosses capitaldetermined loss carryover allowable pursuant to sectionchapter 43‑1029,14, subsectionarticle F2 exceedsof thethis nettitle operatingover lossthe carryoverlosses or capital loss carryover allowable pursuantunder to section 1341(b)(5)702(a)(8) of the internal revenue code.

15.  Any7. amount of qualified educational expenses that is distributed from a qualified state tuition program determined pursuant to section 529 of the internal revenue code and that is included in income in computing federal adjusted gross income.

16.  AnyThe itemamount ofallowed incomeby resultingsection from43-1025 anfor installmentcontributions saleduring thatthe has been properly subjected to income tax in another state in a previous taxable year andof thatagricultural iscrops includedto incharitable Arizonaorganizations. gross income in the current taxable year.

17.  The8. amount authorized by section 43‑1030 relating to holocaust survivors.

18.  ForThe propertyportion placedof inany service:wages or salaries paid or incurred by the taxpayer for the taxable year that is equal to the amount of the federal work opportunity credit, the empowerment zone employment credit, the credit for employer paid social security taxes on employee cash tips and the Indian employment credit that the taxpayer received under sections 45A, 45B, 51(a) and 1396 of the internal revenue code.

(a)  In9. taxable years beginning before December 31, 2012, an amount equal to the depreciation allowable pursuant to section 167(a) of the internal revenue code for the taxable year computed as if the election described in section 168(k) of the internal revenue code had been made for each applicable class of property in the year the property was placed in service.

(b)  InThe taxableamount yearsof beginningexploration fromexpenses andthat afteris Decemberdetermined 31,pursuant 2012to throughsection December617 31,of 2013, an amount determined in the yearinternal therevenue assetcode, wasthat placedhas inbeen servicedeferred based on the calculation in subdivisiona (a) of this paragraph.  In the first taxable year beginningending frombefore andJanuary after1, December 31,1990 2013,and the taxpayer may elect to subtract the amount necessary to make the depreciation claimed to date for thewhich purposesa ofsubtraction thishas titlenot thepreviously same as it would have been ifmade.  subdivisionThe (c)subtraction ofshall thisbe paragraphmade hadon applieda forratable thebasis entireas time the assetunits was in service.  Subdivision (c) of thisproduced paragraphores appliesor forminerals thediscovered remainderor ofexplored theas asset'sa life. result If the taxpayer does not make the election under this subdivision, subdivision (a) of this paragraphexploration appliesare forsold. the remainder of the asset's life.

(c)  In10. taxable years beginning from and after December 31, 2013 through December 31, 2015, an amount equal to the depreciation allowable pursuant to section 167(a) of the internal revenue code for the taxable year as computed as if the additional allowance for depreciation had been ten percent of the amount allowed pursuant to section 168(k) of the internal revenue code.

(d)  InThe taxable years beginning from and after December 31, 2015 through December 31, 2016, an amount equalincluded toin thefederal depreciationadjusted allowablegross income pursuant to section 167(a)86 of the internal revenue codecode, forrelating theto taxabletaxation year as computed as if the additional allowance for depreciation had been fifty‑five percent of thesocial amountsecurity allowedand pursuantrailroad toretirement sectionbenefits. 168(k) of the internal revenue code.

(e)  In11. taxable years beginning from and after December 31, 2016, an amount equal to the depreciation allowable pursuant to section 167(a) of the internal revenue code for the taxable year as computed as if the additional allowance for depreciation had been the full amount allowed pursuant to section 168(k) of the internal revenue code.

19.  WithTo respectthe toextent propertynot thatalready isexcluded soldfrom orArizona otherwisegross disposedincome ofunder during the taxableinternal yearrevenue bycode, acompensation taxpayerreceived thatfor compliedactive withservice sectionas 43‑1021,a paragraph 12member withof respectthe toreserves, that property, the amountnational ofguard depreciationor thatthe hasarmed beenforces allowed pursuant to section 167(a) of the internalUnited revenueStates, codeincluding tocompensation thefor extentservice thatin thea amountcombat haszone notas alreadydetermined reducedunder Arizonasection taxable112 incomeof in the currentinternal orrevenue priorcode. taxable years.

20.  The12. amount contributed during the taxable year to college savings plans established pursuant to section 529 of the internal revenue code to the extent that the contributions were not deducted in computing federal adjusted gross income.  The amount subtracted shall not exceed:

(a)  $2,000The foramount of unreimbursed medical and hospital costs, adoption counseling, legal and agency fees and other nonrecurring costs of adoption not to exceed $3,000.  In the case of a singlehusband individualand wife who file separate returns, the subtraction may be taken by either taxpayer or amay headbe ofdivided household.between them, but the total subtractions allowed both husband and wife shall not exceed $3,000.  The subtraction under this paragraph may be taken for the costs that are described in this paragraph and that are incurred in prior years, but the subtraction may be taken only in the year during which the final adoption order is granted.

(b)  $4,00013. for a married couple filing a joint return.  In the case of a husband and wife who file separate returns, the subtraction may be taken by either taxpayer or may be divided between them, but the total subtractions allowed both husband and wife shall not exceed $4,000.

21.  TheThe portionamount ofauthorized theby net operating loss carryforward that would have been allowed as a deduction in the current year pursuant to section 17243-1027 offor the internaltaxable revenue code if the election described in section 172(b)(1)(H) of the internal revenue code had not been made in the year ofrelating the loss that exceeds the actual net operating loss carryforward that was deducted in arriving at federal adjusted gross income.  This subtraction only applies to taxpayersqualified whowood madestoves, anwood electionfireplaces underor sectiongas 172(b)(1)(H)fired offireplaces. the internal revenue code as amended by section 1211 of the American recovery and reinvestment act of 2009 (P.L.

111‑5)14. or as amended by section 13 of the worker, homeownership, and business assistance act of 2009 (P.L.

111‑92).The amount by which a net operating loss carryover or capital loss carryover allowable pursuant to section 43-1029, subsection F exceeds the net operating loss carryover or capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code.

22.  For15. taxable years beginning from and after December 31, 2013, the amount of any net capital gain included in federal adjusted gross income for the taxable year derived from investment in a qualified small business as determined by the Arizona commerce authority pursuant to section 41‑1518.

23.  AnAny amount of anyqualified neteducational long-termexpenses capitalthat gainis includeddistributed infrom federala adjustedqualified grossstate incometuition forprogram thedetermined taxablepursuant yearto thatsection is529 derivedof fromthe aninternal investmentrevenue incode anand assetthat acquiredis afterincluded Decemberin 31,income 2011,in ascomputing follows:federal adjusted gross income.