AZ SB1108

Creates a tax credit for employers paying employees a local minimum wage exceeding the state minimum wage, effective for taxable years beginning after December 31, 2023.

Credit amount equals 10% of the difference between actual hourly labor costs paid and the product of total hours worked multiplied by the state minimum wage.

Unused credits may be carried forward for up to five consecutive taxable years; co-owners may claim only their pro rata share based on ownership interest.

Requires employers to certify their hourly labor costs and employee hours to the Department of Revenue to claim the credit.

Directs the Department of Revenue to notify the State Treasurer of cities and towns where credit-claiming employers' workers are located, enabling withholding from those municipalities' urban revenue sharing distributions to offset the state's tax credit costs.