A bill introduced for consideration in the Arizona State Legislature could provide millions of dollars in tax incentives to encourage affordable housing development in rural counties.
Rep. Teresa Martinez’s House Bill 2804 would create a state tax credit program similar to the federal Low-Income Housing Tax Credit. Projects would be limited to those in counties with populations of fewer than 800,000 residents. Maricopa and Pima counties would be excluded.
The proposition would allocate a maximum of $2M in annual credits between 2026 and 2036 to help finance new developments. Those credits could go toward income taxes or insurance premium taxes. To be eligible, projects would have to qualify for the federal LITHC program and be ready after June 20, 2027.
The program would be managed by the Arizona Department of Housing. Credit awards would be based on project feasibility under ADoH’s qualified allocation plan.
Investors could claim the credit over six years. Unused portions could carry forward for up to five years, and a proportional share of state credits would be reclaimed if federal tax credits were later recaptured.
The bill would apply retroactively to taxable years starting after Dec. 31, 2026, and in the event of appeal after 2036, any credits already awarded would remain valid.
Supporters of the measure say the program will make housing developments in rural areas more feasible and help them overcome high construction costs and limited financing availability. (Source)