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HB 4135ARIZONASession 57th-2nd-regularState Billdead

Did Not Advance

Arizona House Bill 4135 establishes a $15 million annual child care tax credit for families with young children

Original title: income tax; credit; child care

Last action · February 12, 2026: House Second ReadingSponsors: Elda Luna-Nájera and 18 others

Bill progressHistory & official text ↓

Introduced

Committee

Floor Vote

Passed

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What This Bill Proposed

Official description

income tax; credit; child care

Why it matters

Parents using certified family child care homes or in-home providers for children age five or younger can lower their state income tax liability or receive a direct cash refund, up to $2,000 depending on household income.

Background

Arizona's individual income tax system is structured under Title 43 of the Arizona Revised Statutes, which governs tax credits, deductions, and return filing requirements. context
The Arizona Department of Revenue administers tax collections and processing, while the Department of Economic Security oversees social and child care assistance programs in the state. context

Who It Would Have Affected

Groups the bill's text would have affected, as described in the record. Being affected is not a position for or against it.

Directly affected

Working families with young children

Taxpayers with incomes under $150,000 and children age five or younger are eligible to claim a state income tax credit or cash refund for child care expenses.

Directly affected

Family child care homes and in-home providers

Providers must be certified by the Department of Economic Security and implement an aligned curriculum for client families to qualify for the tax credit.

Directly affected

Arizona Department of Revenue

The department must administer the tax credit, update tax return forms, track the $15 million aggregate cap, and issue refunds for excess credit amounts.

Key Facts

Establishes a tax credit for taxpayers with a qualified child who is five years of age or younger as of December 31 of the taxable year.
Provides a $2,000 tax credit per qualified child for taxpayers with a federal adjusted gross income of $75,000 or less.
Provides a $1,000 tax credit per qualified child for taxpayers with a federal adjusted gross income of more than $75,000 but less than $150,000.
Requires the qualified child to receive child care services through a family child care home or in-home provider certified by the Department of Economic Security that implements an aligned curriculum.

Show all 9 facts

Makes any tax credit amount that exceeds tax liability refundable to the taxpayer.
Caps total statewide authorized credits under this section at $15 million annually, awarded on a first-come, first-served basis.
Updates tax return forms to allow taxpayers claiming the new child care credit to use short and simplified return forms.
Applies to taxable years beginning from and after December 31, 2025.
Updates the joint legislative income tax credit review schedule to include section 43-1080 for review in years ending in 1 and 6.

Frequently Asked Questions

Who qualifies for the new child care tax credit?

Taxpayers with a under $150,000 who have a dependent child age five or younger receiving care from a Department of Economic Security-certified family child care home or in-home provider using an approved curriculum.

What is the maximum credit amount a family can receive?

The credit is $2,000 per qualified child for families making $75,000 or less, and $1,000 per qualified child for families making between $75,000 and $150,000.

Is there a limit on the total amount of credits awarded statewide?

Yes, the department may not authorize more than $15 million in total credits statewide each year, and credits are awarded on a first-come, first-served basis.

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Where This Stands

This bill did not become law - Died at adjournment · on the House floor.

Procedural history

2 actions

Feb 12, 2026HouseFloor
House Second Reading
Feb 11, 2026HouseIntroduced
House First Reading

Version history

Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.

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