SB 1734 Summary

• Allows partnerships and S corporations to elect entity-level taxation at rates prescribed for individual income tax on resident partners/shareholders and nonresident-sourced income for taxable years beginning after December 31, 2021, with election made by tax return due date.

• Increases the individual income tax subtraction for adoption expenses from current law to $40,000 for taxable years 2023-2025, covering unreimbursed medical, counseling, legal, and agency fees, with married couples able to divide or allocate the full amount between spouses.

• Establishes a one-time Arizona Families Tax Rebate of $250 per dependent under age 17 and $100 per dependent age 17+ (maximum three dependents) for taxpayers who filed full-year resident returns for tax year 2021 with dependent tax credits and at least $1 tax liability in 2021, 2020, or 2019.

• Requires the Department of Revenue to issue rebates between October 15 and November 15, 2023, with late claims accepted through November 15, 2024, and mandates a report to legislative leaders by February 15, 2025 on total payments, administrative costs, and number of rebates issued.

• Caps local government fees at $6,597,200 for fiscal year 2023-2024 and limits related transfers to $800,000 and $178,100 respectively, with distribution proportional to prior revenue received by counties, cities, towns, councils of governments, and regional transportation authorities.