SB 1039 Summary

• Allows taxpayers to subtract up to $10,000 per qualified student annually for tuition expenses paid to attend nongovernmental primary or secondary schools in Arizona, effective for taxable years beginning after December 31, 2022.

• Defines "qualified student" as a taxpayer's dependent enrolled in kindergarten or grades 1-12 at a qualified school, and "qualified school" as any nongovernmental primary or secondary school in Arizona.

• Prohibits the subtraction for tuition paid with funds withdrawn from college savings plans under IRC Section 529 or Arizona empowerment scholarship accounts.

• Creates new section 43-1026 in Arizona Revised Statutes and adds the tuition subtraction as paragraph 28 (or 29 in certain scenarios) to existing section 43-1022 regarding subtractions from Arizona gross income.

• Enactment is conditional on voter approval or failure to refer Laws 2021, chapter 436 (subject of referendum petition R-06-2021) to voters at the next general election.