AZ SB1040

Establishes an Arizona earned income tax credit (EITC) equal to 5% of the federal earned income tax credit allowed to qualifying taxpayers under Internal Revenue Code Section 32.

Requires the credit to be claimed on the income tax return using a department-provided form, with an exception for taxpayers with no tax liability who don't meet filing requirements.

Limits the credit to one claimant per household per taxable year.

Provides that any credit amount exceeding the taxpayer's tax liability (after other credits and setoffs) shall be refunded to the taxpayer in the same manner as refunds under existing law.

Applies retroactively to taxable years beginning after December 31, 2020.