Arizona shows an average deal value of $3.23 million with 381 new jobs created per deal
QUALITY JOBS TAX CREDIT PROGRAM
This new program provides Arizona income tax credits for companies creating new jobs and investing in Arizona. The credit is valued at up to $9,000 over a three-(3) year period per each new employee and offers a five-(5) year carry forward provision for any unused tax credits. Eligibility qualifications are different for rural and metro areas:
The Quality Jobs Tax Credit Program is capped at 10,000 jobs being claimed each year by all participants.
RESEARCH AND DEVELOPMENT TAX CREDIT
The Research and Development (R&D) tax credit provides an Arizona income tax credit for increased research and development activities conducted in this state, including research conducted at a state university and funded by the company. The goal is to encourage Arizona businesses to continue investing in research and development activities.
The amount of credit is based on the federal regular credit computation method for Arizona qualified research expenses and Arizona basic research payments. For tax year 2011 thru 2017, if the allowable expenses are $2,500,000 or less, the credit is 24% of the allowable expenses. For tax year 2011 thru 2017, if the allowable expenses exceed $2,500,000, the credit is $600,000 plus 15% of the amount of expenses over $2,500,000.
A company may be eligible for a partial refund of its R&D tax credit, if:
- The Company employs no less than 150 full-time employees
- The current year's Arizona R&D tax credit exceeds the current year's tax liability
- Company must receive a "Certificate of Qualification" from Commerce
- Remits a non-refundable processing fee equal to 1% of the company’s tax credit being refunded
If a taxpayer elects to carry forward its R&D tax credit for the tax year, it is no longer eligible for a refund for that tax year. A taxpayer that files a return with Revenue without claiming a refund of the R&D tax credit is electing to carry the unused R&D credit forward for the tax year.
ENTERPRISE ZONE PROGRAM
Businesses located within a state-designated Enterprise Zone (“EZ”) may claim state corporate income tax credits if they have created net new “qualified employment positions.”
In order to be considered a qualified employment position, the following criteria must be met:
- Position must require a minimum of 1,750 work hours per year
- Employee in qualified position must be an Arizona resident; and
- Position must have been filled for at least 90 days during the first taxable year
- Thirty-five percent (35%) of the net new eligible employees on whom the business is claiming a credit must live within an EZ within the same county as the business
EZ credits for qualified employment positions are equal to:
- One-fourth of wages paid up to $500
- One-third of wages paid to each previously qualified employee up to $1,000
- One-half of wages paid to each previously qualified employee up to $1,500
If the allowable credit exceeds a company’s state income tax liability, then any unused credits may be carried forward for up to five taxable years provided that the business remains in the EZ.
OTHER ARIZONA INCENTIVE PROGRAMS
- Arizona Innovation Accelerator Fund
- Arizona Innovation Challenge
- Arizona Job Training Program
- AZ Fast Grant
- AZ State Trade and Export Promotion Program
- Qualified Facilities Tax Credits Program
- Sales Tax Exemptions for Machinery and Equipment
- Computer Data Center (CDC) Tax Exemptions
- Angel Tax Credit
- Renewable Energy Tax Incentive Program
- Renewable Energy Production Tax Credit
- Commercial and Industrial Solar Tax Credit Program
- Military Reuse Zone
- Foreign Trade Zone
- Private Activity Bond