The bill establishes a new tax credit for employers who incur increased hourly labor costs due to local minimum wage laws that exceed the state minimum wage. Specifically, it allows a credit against individual and corporate income tax for 10% of the difference between the actual hourly labor costs paid by the employer and the total hours worked multiplied by the state minimum wage. To qualify, employers must operate in a city or town with a higher local minimum wage and certify their labor costs to the Arizona Department of Revenue. The credit can be carried forward for up to five years if it exceeds the taxpayer's liability.

Additionally, the bill mandates that the State Treasurer withhold a portion of the Urban Revenue Sharing Fund (URS Fund) distribution from cities or towns to reimburse the state for the credits claimed. This withholding will be based on the total credits claimed in the previous taxable year. The bill also includes definitions for "local minimum wage" and "state minimum wage," and it ensures that the withholding does not affect any amounts necessary for debt service on bonds or long-term obligations of the city or town. Overall, the bill aims to support employers facing higher labor costs due to local wage regulations while managing the fiscal impact on the state budget.

Statutes affected:
Introduced Version: 43-206, 43-222, 43-1079, 43-1166, 49-282, 42-5033, 42-5033.01, 41-2257, 41-2258, 41-194.01, 43-1079.01, 43-1088, 43-1089.04, 43-1167.01, 43-1175, 43-1072.02, 43-1074.02, 43-1075, 43-1076.01, 43-1077, 43-1078, 43-1083, 43-1083.02, 43-1162, 43-1164.03, 43-1183, 43-1073, 43-1082, 43-1085, 43-1086, 43-1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1164, 43-1165, 43-1181, 43-1074.01, 43-1168, 43-1170, 43-1178, 43-1073.01, 43-1081.01, 43-1083.03, 43-1084, 43-1164.04, 43-1164.05, 43-1184, 23-364, 23-363
Senate Engrossed Version: 43-206, 43-222, 43-1079, 43-1166, 49-282, 42-5033, 42-5033.01, 41-2257, 41-2258, 41-194.01, 43-1079.01, 43-1088, 43-1089.04, 43-1167.01, 43-1175, 43-1072.02, 43-1074.02, 43-1075, 43-1076.01, 43-1077, 43-1078, 43-1083, 43-1083.02, 43-1162, 43-1164.03, 43-1183, 43-1073, 43-1082, 43-1085, 43-1086, 43-1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1164, 43-1165, 43-1181, 43-1074.01, 43-1168, 43-1170, 43-1178, 43-1073.01, 43-1081.01, 43-1083.03, 43-1084, 43-1164.04, 43-1164.05, 43-1184, 23-364, 23-363