Bill Text: AZ HB2018 | 2016 | Fifty-second Legislature 2nd Regular | Engrossed
Bill Title: Optional individual flat income tax
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2016-03-02 - Referred to Senate FIN Committee [HB2018 Detail]
Download: Arizona-2016-HB2018-Engrossed.html
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House Engrossed |
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State of Arizona House of Representatives Fifty-second Legislature Second Regular Session 2016
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HOUSE BILL 2018 |
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AN ACT
amending sections 43-323, 43-1001, 43-1011 and 43-1012, Arizona Revised Statutes; amending title 43, chapter 10, Arizona Revised Statutes, by adding article 2.1; amending sections 43-1023, 43-1041, 43-1042, 43‑1043, 43‑1094, 43‑1095 and 43‑1098, Arizona Revised Statutes; relating to individual income tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-323, Arizona Revised Statutes, is amended to read:
43-323. Place and form of filing returns
A. All returns required by this title shall be in such a form as the department may from time to time prescribe and shall be filed with the department.
B. The department shall prescribe a short form return for individual taxpayers who:
1. Are eligible and elect to pay tax based on the optional tax tables pursuant to section 43‑1012.
2. Elect to claim the optional standard deduction pursuant to section 43‑1041.
3. Elect not to file for credits against income tax liability other than those contained in sections 43‑1072, 43‑1072.01 and 43‑1073.
4. Are not required to add any income under section 43‑1021 and do not elect any subtractions under section 43‑1022, except for the exemptions allowed under section 43‑1023.
C. The department may provide a simplified return form for individual taxpayers who:
1. Are eligible and elect to pay tax based on the optional tax tables pursuant to section 43‑1012.
2. Are residents for the full taxable year.
3. File as single individuals or married couples filing joint returns under section 43‑309.
4. Are not sixty‑five years of age or older or blind at the end of the taxable year.
5. Claim no exemptions under section 43-1023 for the taxable year.
6. Elect to claim the optional standard deduction under section 43‑1041.
7. Are not required to add any income under section 43‑1021 and do not elect to claim any subtractions under section 43‑1022 or file for any credits under chapter 10, article 5 of this title, except the credits provided by sections 43‑1072.01 and 43‑1073.
8. Do not elect to contribute a portion of any tax refund as provided by any provision of chapter 6, article 1 of this title. Notwithstanding any provision of chapter 6, article 1 of this title, a simplified return form under this subsection shall not include any space for the taxpayer to so contribute a portion of a refund.
D. The department shall prescribe a simplified return form for individual taxpayers who:
1. Are eligible and elect to pay tax pursuant to chapter 10, article 2.1 of this title.
2. File as single individuals.
3. Claim no subtractions, exemptions, deductions or credits under chapter 10, articles 3, 4 and 5, except as allowed by section 43-1015.02.
4. Are not required to add any income under section 43-1021, except as provided by section 43-1015.02.
D. E. The department shall prepare blank forms for the returns and shall distribute them throughout the state and furnish them upon application. Failure to receive or secure the form does not relieve any taxpayer from making any return required.
Sec. 2. Section 43-1001, Arizona Revised Statutes, is amended to read:
43-1001. Definitions
In this chapter, unless the context otherwise requires:
1. "Arizona adjusted gross income" of a resident individual means the individual's Arizona gross income subject to modifications specified in sections 43‑1021 and 43‑1022.
2. "Arizona gross income" of a resident individual means the individual's federal adjusted gross income for the taxable year, computed pursuant to the internal revenue code.
3. "Dependent" has the same meaning prescribed by section 152 of the internal revenue code.
4. "Federal adjusted gross income" of a resident individual means the individual's adjusted gross income computed pursuant to the internal revenue code.
5. "Head of household" has the same meaning prescribed by sections 2(b) and 2(c) of the internal revenue code. Head of household includes an individual who meets the qualifications of a surviving spouse under section 2(a) of the internal revenue code.
6. "Married person" means a married person on the last day of the taxable year subject to the rules in section 43‑1002.
7. "Net income" means taxable income.
8. "Person" means an individual.
9. "Single person" means any person who is not married or who was legally separated on the last day of the person's taxable year.
10. "Spouse" means the wife or husband of the taxpayer.
11. "Taxable income" of a resident individual shall be means Arizona adjusted gross income less the exemptions and deductions allowed in article 4 of this chapter, except as provided by article 2.1 of this chapter.
12. "Taxpayer" means any person who is subject to a tax imposed by this chapter.
Sec. 3. Section 43-1011, Arizona Revised Statutes, is amended to read:
43-1011. Taxes and tax rates
A. Except as provided by article 2.1 of this chapter, there shall be levied, collected and paid for each taxable year on the entire taxable income of every resident of this state and on the entire taxable income of every nonresident that is derived from sources within this state taxes determined in the following manner:
1. For taxable years beginning from and after December 31, 1996 through December 31, 1997:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.90% of taxable income
$10,001 - $25,000 $290, plus 3.30% of the excess over $10,000
$25,001 - $50,000 $785, plus 3.90% of the excess over $25,000
$50,001 - $150,000 $1,760, plus 4.80% of the excess over $50,000
$150,001 and over $6,560, plus 5.17% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.90% of taxable income
$20,001 - $50,000 $580, plus 3.30% of the excess over $20,000
$50,001 - $100,000 $1,570, plus 3.90% of the excess over $50,000
$100,001 - $300,000 $3,520, plus 4.80% of the excess over $100,000
$300,001 and over $13,120, plus 5.17% of the excess over $300,000
2. For taxable years beginning from and after December 31, 1997 through December 31, 1998:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.88% of taxable income
$10,001 - $25,000 $288, plus 3.24% of the excess over $10,000
$25,001 - $50,000 $774, plus 3.82% of the excess over $25,000
$50,001 - $150,000 $1,729, plus 4.74% of the excess over $50,000
$150,001 and over $6,469, plus 5.10% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.88% of taxable income
$20,001 - $50,000 $576, plus 3.24% of the excess over $20,000
$50,001 - $100,000 $1,548, plus 3.82% of the excess over $50,000
$100,001 - $300,000 $3,458, plus 4.74% of the excess over $100,000
$300,001 and over $12,938, plus 5.10% of the excess over $300,000
3. For taxable years beginning from and after December 31, 1998 through December 31, 2005:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.87% of taxable income
$10,001 - $25,000 $287, plus 3.20% of the excess over $10,000
$25,001 - $50,000 $767, plus 3.74% of the excess over $25,000
$50,001 - $150,000 $1,702, plus 4.72% of the excess over $50,000
$150,001 and over $6,422, plus 5.04% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.87% of taxable income
$20,001 - $50,000 $574, plus 3.20% of the excess over $20,000
$50,001 - $100,000 $1,534, plus 3.74% of the excess over $50,000
$100,001 - $300,000 $3,404, plus 4.72% of the excess over $100,000
$300,001 and over $12,844, plus 5.04% of the excess over $300,000
4. For taxable years beginning from and after December 31, 2005 through December 31, 2006:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.73% of taxable income
$10,001 - $25,000 $273, plus 3.04% of the excess over $10,000
$25,001 - $50,000 $729, plus 3.55% of the excess over $25,000
$50,001 - $150,000 $1,617, plus 4.48% of the excess over $50,000
$150,001 and over $6,097, plus 4.79% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.73% of taxable income
$20,001 - $50,000 $546, plus 3.04% of the excess over $20,000
$50,001 - $100,000 $1,458, plus 3.55% of the excess over $50,000
$100,001 - $300,000 $3,233, plus 4.48% of the excess over $100,000
$300,001 and over $12,193, plus 4.79% of the excess over $300,000
5. Subject to subsection subsections B and C of this section, for taxable years beginning from and after December 31, 2006:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.59% of taxable income
$10,001 - $25,000 $259, plus 2.88% of the excess over $10,000
$25,001 - $50,000 $691, plus 3.36% of the excess over $25,000
$50,001 - $150,000 $1,531, plus 4.24% of the excess over $50,000
$150,001 and over $5,771, plus 4.54% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.59% of taxable income
$20,001 - $50,000 $518, plus 2.88% of the excess over $20,000
$50,001 - $100,000 $1,382, plus 3.36% of the excess over $50,000
$100,001 - $300,000 $3,062, plus 4.24% of the excess over $100,000
$300,001 and over $11,542, plus 4.54% of the excess over $300,000
B. For the taxable year beginning from and after December 31, 2014 through December 31, 2015, the department shall adjust the income dollar amounts for each rate bracket prescribed by subsection A, paragraph 5 of this section according to the average annual change in the metropolitan Phoenix consumer price index published by the United States bureau of labor statistics. The revised dollar amounts shall be raised to the nearest whole dollar. The income dollar amounts for each rate bracket may not be revised below the amounts prescribed in the prior taxable year.
C. For each taxable year beginning from and after December 31, 2015, the department shall adjust the income dollar amounts for each rate bracket prescribed by subsection A, paragraph 5 of this section according to the average annual change in the metropolitan Phoenix consumer price index published by the United States bureau of labor statistics. The revised dollar amounts shall be raised to the nearest whole dollar. The income dollar amounts for each rate bracket may not be revised below the amounts prescribed in the prior taxable year.
Sec. 4. Section 43-1012, Arizona Revised Statutes, is amended to read:
43-1012. Optional tax tables
A. In lieu of the tax imposed under section 43-1011 or article 2.1 of this chapter, there shall be levied, collected and paid for each taxable year upon on the taxable income of each individual who has been a resident of this state for the entire taxable year and whose taxable income for such year is less than fifty thousand dollars, regardless of filing status, a tax based on the rates prescribed by section 43-1011 as shown in optional tax tables developed by the department. The tables shall prescribe tax liability amounts, based on filing status, in fifty dollar increments of taxable income.
B. This section shall not apply to an individual filing a return for a period of less than twelve months on account of a change in the accounting period or to a married individual whose spouse files a return and computes the tax without regard to this section or section 43-1041, subsection A.
C. An individual, who is not a head of a household or a married person, shall be treated as a single person.
Sec. 5. Title 43, chapter 10, Arizona Revised Statutes, is amended by adding article 2.1, to read:
ARTICLE 2.1. OPTIONAL SINGLE‑RATE TAX
43-1015. Definition of state taxable income
In this article, unless the context otherwise requires, "State taxable income" means an individual's Arizona gross income after making the additions, subtractions and adjustments required by section 43‑1015.02.
43-1015.01. Tax; rate
A. For taxable years beginning from and after December 31, 2016 through December 31, 2021, in lieu of the tax levied against taxable income pursuant to article 2 of this chapter, a taxpayer may elect to compute and pay the tax under this article if the taxpayer meets both of the following requirements:
1. The taxpayer files as a single person.
2. The taxpayer's Arizona gross income, plus non-Arizona municipal interest described in section 43-1015.02, subsection A, paragraph 2, for the taxable year does not exceed twenty-five thousand dollars.
B. the tax is levied and shall be collected and paid at the rate of one percent of the taxpayer's state taxable income for the taxable year.
C. A taxpayer who qualifies and elects to compute and pay tax under this article:
1. May not make any addition or claim any subtraction, exemption, deduction or credit under article 3, 4 or 5 of this chapter, except as provided by section 43-1015.02.
2. Qualifies for refunds in the case of overpayment of taxes and may contribute all or part of the refund as provided by chapter 6, article 1 of this title.
D. The taxpayer shall make an election to pay the tax pursuant to this article by filing the simplified return form prescribed pursuant to section 43-323, subsection D, either as the original or as an amended return for the taxable year.
43-1015.02. Computing state taxable income; additions, subtractions and adjustments
A. In computing state taxable income for the purposes of this article, the taxpayer shall add to Arizona gross income:
1. Amounts withdrawn from a medical savings account by the individual during the taxable year computed pursuant to section 220(f) of the internal revenue code and not included in Arizona gross income.
2. The amount of interest income received on obligations of any state, territory or possession of the United States, or any political subdivision of a state, territory or possession, located outside this state, reduced by the amount of any interest on indebtedness and other related expenses that were incurred or continued to purchase or carry those obligations and that are not otherwise deducted or subtracted in computing Arizona gross income.
B. In computing state taxable income for the purposes of this article, the taxpayer shall subtract from Arizona gross income:
1. A standard personal exemption of ten thousand dollars.
2. Interest income received on obligations of the United States, less any interest on indebtedness, or other related expenses, and deducted in computing Arizona gross income, that were incurred or continued to purchase or carry the obligations.
3. An amount received by an enrolled member of an American Indian tribe to the extent that this state is not authorized or permitted to impose a tax under this chapter on that amount pursuant to federal law, a treaty or a final decision by a court of competent jurisdiction.
4. The amount included in Arizona gross income pursuant to section 86 of the internal revenue code, relating to taxation of social security and railroad retirement benefits.
C. In addition to the additions and subtractions under subsections A and B of this section, the department shall provide for adjustments to Arizona gross income to prevent double tax benefits or double tax detriments with respect to the same item of income or expense.
43-1015.03. Administration
Unless the context otherwise requires, the department shall administer and collect the tax under this article in the same manner as other individual income taxes under this title.
Sec. 6. Section 43-1023, Arizona Revised Statutes, is amended to read:
43-1023. Exemptions for blind persons, persons over sixty‑five years of age and dependents
A. A taxpayer is allowed an exemption of one thousand five hundred dollars:
1. For a taxpayer who is blind or if either the taxpayer's central visual acuity does not exceed 20/200 in the better eye with correcting lenses or the taxpayer's visual acuity is greater than 20/200 but is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than twenty degrees.
2. For the taxpayer's spouse if a separate return is made by the taxpayer, and if the spouse is blind, as defined described in paragraph 1 of this subsection, has no Arizona adjusted gross income for the calendar year in which the taxable year of the taxpayer begins and is not the dependent of another taxpayer. For the purposes of this paragraph, the determination of whether the spouse is blind shall be made at the close of the taxable year of the taxpayer. If the spouse dies during such taxable year, the determination shall be made as of the time of the spouse's death.
B. A taxpayer is allowed an exemption of two thousand three hundred dollars for:
1. Each dependent of the taxpayer, as defined in section 43‑1001.
2. Each person age sixty‑five or older regardless of the person's relationship to the taxpayer:
(a) If the taxpayer pays more than one‑fourth of the total cost of maintaining such person in a nursing care institution or residential care institution licensed pursuant to title 36, chapter 4, or an assisted living facility provider of a type certified pursuant to title 11, chapter 2, article 7, if such payments exceed eight hundred dollars in the taxable year.
(b) If the taxpayer otherwise makes payments exceeding eight hundred dollars in the taxable year for home health care or other types of medical care.
3. For taxable years beginning from and after December 31, 2003, each birth for which a certificate of birth resulting in stillbirth has been issued pursuant to section 36‑330 if the child otherwise would have been a member of the taxpayer's household. The taxpayer may claim the exemption under this paragraph only in the taxable year in which the stillbirth occurred.
C. For taxable years beginning from and after December 31, 1998, a resident taxpayer is allowed an exemption of ten thousand dollars for each parent or ancestor of a parent of the taxpayer, who is age sixty‑five or older, who requires assistance with activities of daily living and who lives in the taxpayer's principal residence for the entire taxable year, if the taxpayer pays more than one‑half of the person's total support and maintenance costs. An exemption under this subsection is in lieu of an exemption under subsection B of this section for the same person.
D. A taxpayer shall not take more than one exemption for the same person under either subsection B or C of this section.
E. A taxpayer is allowed an exemption of two thousand one hundred dollars:
1. If the taxpayer has attained the age of sixty‑five before the close of the taxable year filing a separate or joint return and the taxpayer is not claimed as a dependent by another taxpayer.
2. For the taxpayer's spouse if the spouse has attained the age of sixty‑five before the close of the taxable year, a joint return is filed and the spouse is not a dependent of another taxpayer.
F. The exemptions under this section do not apply to the computation of tax under article 2.1 of this chapter.
Sec. 7. Section 43-1041, Arizona Revised Statutes, is amended to read:
43-1041. Optional standard deduction
A. A taxpayer may elect to take a standard deduction as follows:
1. In the case of a single person or a married person filing separately, the standard deduction shall be four thousand fifty dollars, subject to subsection G of this section.
2. In the case of a married couple filing a joint return or a single person who is a head of a household, the standard deduction shall be eight thousand one hundred dollars, subject to subsection G of this section.
B. The standard deduction provided for in subsection A of this section shall be in lieu of all itemized deductions allowed by section 43‑1042, which are to be subtracted from Arizona adjusted gross income in computing taxable income, but not in lieu of the personal exemption allowed by section 43‑1043.
C. The standard deduction shall be allowed if the taxpayer so elects, and the department shall by rule prescribe the manner of signifying such election in the return.
D. In the case of a husband and wife, the standard deduction provided for in subsection A of this section shall not be allowed to either if the taxable income of one of the spouses is determined without regard to the standard deduction.
E. The standard deduction provided for by subsection A of this section shall not be allowed in the case of a taxable year of less than twelve months on account of a change in the accounting period.
F. Under rules adopted by the department, a change of an election to take, or not to take, the standard deduction for any taxable year may be made after the filing of the return for such year. If the spouse of the taxpayer filed a separate return for any taxable year corresponding, for the purposes of subsection D of this section, to the taxable year of the taxpayer, the change shall not be allowed unless, in accordance with such rules, both paragraphs 1 and 2 of this subsection apply:
1. The spouse makes a change of election with respect to the standard deduction for the taxable year covered in such separate return consistent with the change of election sought by the taxpayer.
2. The taxpayer and spouse consent in writing to the assessment, within such period as may be agreed upon on with the department, of any deficiency, to the extent attributable to such a change of election, even though at the time of the filing of such a consent the assessment of such a deficiency would otherwise be prevented by the operation of any law or rule of law.
G. For each taxable year beginning on or after January 1, the department shall adjust the dollar amounts prescribed by subsection A, paragraphs 1 and 2 of this section according to the average annual change in the metropolitan Phoenix consumer price index published by the United States bureau of labor statistics. The revised dollar amounts shall be raised to the nearest whole dollar. The designated dollar amounts shall not be revised below the amounts allowed by the standard deduction in the prior taxable year.
H. The standard deduction under this section does not apply to the computation of tax under article 2.1 of this chapter.
Sec. 8. Section 43-1042, Arizona Revised Statutes, is amended to read:
43-1042. Itemized deductions
A. Except as provided by subsections B and D of this section, at the election of the taxpayer, and in lieu of the standard deduction allowed by section 43‑1041, in computing taxable income the taxpayer may take the amount of itemized deductions allowable for the taxable year pursuant to subtitle A, chapter 1, subchapter B, parts VI and VII, but subject to the limitations prescribed by sections 67, 68 and 274, of the internal revenue code.
B. In lieu of the amount of the federal itemized deduction for expenses paid for medical care allowed under section 213 of the internal revenue code, the taxpayer may deduct the full amount of such expenses.
C. Notwithstanding subsection B of this section, expenses for long‑term health care that are paid or reimbursed from the taxpayer's long‑term health care savings account pursuant to section 43‑1032 shall not be deducted pursuant to this section.
D. A taxpayer shall not claim both a deduction provided by this section and a credit allowed by this title with respect to the same charitable contributions.
E. The taxpayer may add any interest expense paid by the taxpayer for the taxable year that is equal to the amount of federal credit for interest on certain home mortgages allowed by section 25 of the internal revenue code.
F. The itemized deductions under this section do not apply to the computation of tax under article 2.1 of this chapter.
Sec. 9. Section 43-1043, Arizona Revised Statutes, is amended to read:
43-1043. Personal exemptions
A. There shall be allowed as an exemption, in the case of:
1. A single individual, a personal exemption of two thousand one hundred dollars.
2. A head of a household or a married individual, a personal exemption of four thousand two hundred dollars under this paragraph. A husband and wife shall receive but one personal exemption of four thousand two hundred dollars. If the husband and wife make separate returns, the personal exemption may be taken by either or divided between them.
3. A married couple who claim at least one dependent, an exemption of six thousand three hundred dollars. If the husband and wife make separate returns, the personal exemption may be taken by either or divided between them. An exemption under this paragraph is in lieu of the exemption under paragraph 2 of this subsection.
B. The exemptions under this section do not apply to the computation of tax under article 2.1 of this chapter.
Sec. 10. Section 43-1094, Arizona Revised Statutes, is amended to read:
43-1094. Adjusted gross income of a nonresident
A. Except as provided in subsection B of this section:
1. In
computing Arizona adjusted gross income, a nonresident individual should make
such adjustments as are included in sections 43‑1021 and 43‑1022 which that
apply to income included in his the individual's Arizona
gross income, except
as provided in subsection B of this section
paragraph 2 of this
subsection.
B. 2. For a
nonresident individual,
the exemption allowed by section 43‑1022, paragraph 1 shall be allowed in
an amount equal to that percentage of the exemptions set forth in section
43-1023 which his the individual's Arizona gross income is
of his the federal adjusted gross income.
B. A nonresident individual who elects to compute and pay tax on state taxable income under article 2.1 of this chapter shall make such adjustments as are included in section 43-1015.02 that apply to income included in Arizona gross income.
Sec. 11. Section 43-1095, Arizona Revised Statutes, is amended to read:
43-1095. Taxable income of a nonresident
A. In computing Arizona taxable income, a nonresident taxpayer, except a member of the armed forces, shall be allowed that percentage of the exemptions set forth in section 43‑1043 which the taxpayer's Arizona gross income is of the federal adjusted gross income.
B. In the case of a nonresident taxpayer, the standard deduction
allowed in section 43-1041 and the itemized deductions allowed in section 43‑1042
shall be allowed in the percentage which that the taxpayer's Arizona
gross income is of the federal adjusted gross income.
C. Exemptions and deductions under this section do not apply to the computation of tax under article 2.1 of this chapter.
Sec. 12. Section 43-1098, Arizona Revised Statutes, is amended to read:
43-1098. Apportionment of exemptions
A. Any resident taxpayer, other than an active
member of the armed forces of the United States or any other auxiliary branch,
who commences or terminates his residency
in this state during any one taxable year shall prorate the following on the
basis of the proportion which such that the taxpayer's total
Arizona gross income bears to the federal adjusted gross income:
1. The personal exemption provided in section 43‑1043.
2. The exemptions provided in section 43‑1023 for the blind, for persons age sixty-five or older and for dependents.
B. The percentage of exemption allowed shall be computed by dividing the taxpayer's Arizona gross income by the federal adjusted gross income.
C. This section does not apply to any taxpayer who elects to compute and pay tax on state taxable income under article 2.1 of this chapter.
Sec. 13. Effective date
This act is effective and applies to taxable years beginning from and after December 31, 2016.
