AZ SB1038

Creates a new income tax credit for taxpayers who paid primary and secondary school district property taxes on residential property if a qualified student attended a qualified school during the taxable year.

Credit amount equals the lesser of: (1) primary and secondary school district property taxes actually paid during the taxable year, or (2) tuition expenses actually paid for the qualified student to attend a qualified school.

Defines "qualified school" as a nongovernmental primary or secondary school in Arizona and "qualified student" as a dependent enrolled in kindergarten through grade twelve at such a school.

Allows unused credits to be carried forward for up to five consecutive taxable years; spouses filing separately may each claim only one-half of the credit.

Effective for taxable years beginning after December 31, 2022, only if Laws 2021, chapter 436 (subject of referendum petition R-06-2021) is approved by voters or fails to be referred to voters at the next general election.