SB1213 introduces a new income tax credit, the Credit for Increased Hourly Labor Costs (Credit), starting in the tax year 2025. This credit is for employers in cities or towns that have a local minimum wage higher than the state minimum wage. The credit amount is set at 5% of the difference between the actual hourly labor costs paid and the total hours worked by employees multiplied by the state minimum wage, with a cap of $5 million per city or town per calendar year. To fund the credit, the State Treasurer is required to withhold monies from the city's or town's Urban Revenue Sharing Fund (URS Fund) distribution, equal to the total credits claimed, and deposit them into the state General Fund.

The bill also specifies that the credit is granted on a first-come, first-served basis and includes provisions for employers to qualify for the credit. Employers must employ workers in a city or town with a higher local minimum wage and certify their actual hourly labor costs to the Arizona Department of Revenue. The credit can be carried forward for five years if it exceeds the taxpayer's liability, and co-owners of a business can claim a pro rata share of the credit. The bill includes a purpose statement, technical changes, and becomes effective on the general effective date.

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