If enacted, this bill would amend the current statute regarding the subtraction of adoption expenses from Arizona gross income. Under current law, the maximum allowable subtraction for adoption-related costs is $3,000, which can only be claimed in the year the final adoption order is granted. The bill would maintain this provision but clarify that the subtraction can be taken for costs incurred in prior years. It would also introduce new limits for future taxable years, allowing a $5,000 subtraction for single individuals or heads of household and a $10,000 subtraction for married couples filing jointly, effective for taxable years beginning January 1, 2026.

Additionally, the bill would make technical changes to the language of the statute, ensuring clarity in the application of these provisions. The current language that restricts the subtraction to the year of the final adoption order would be removed, allowing for greater flexibility in claiming these deductions. Overall, the bill aims to enhance the financial support for families undergoing adoption by increasing the allowable deductions based on filing status and extending the time frame for claiming these expenses.

Statutes affected:
Introduced Version: 43-1022
House Engrossed Version: 43-1022