AZ HB2987

Creates a state income tax credit of 20% of qualified rehabilitation expenses for substantial rehabilitation of certified historic structures listed on the National or Arizona Register of Historic Places, with a 25% credit for projects that include certified affordable housing.

Caps the annual aggregate tax credit amount at $30 million for taxable years beginning after December 31, 2025, with an additional $30 million authorized for taxable years beginning after December 31, 2035.

Reserves 60% of annual tax credits for rehabilitation projects in cities and towns with populations under 150,000 persons during the first application period each year.

Requires certification from the State Historic Preservation Officer, including a cost-benefit analysis by the Arizona Commerce Authority demonstrating positive economic impact, and mandates a 24-month restrictive covenant preventing non-approved alterations.

Allows unused credits to be carried forward for 10 consecutive taxable years and permits credits to be assigned, transferred, or sold to other persons, with proceeds exempt from income tax.