State of Arizona Incentives
The Arizona Commerce Authority (ACA) is the state’s economic development organization with a streamlined mission to grow and strengthen Arizona’s economy. Arizona has lowered taxes, streamlined regulations, and established a suite of incentives to support corporate growth and expansion. For the complete list of incentives and programs offered by the ACA, please click here.
The Quality Jobs tax credit encourages business investment and the creation of high-quality employment opportunities in the state. The program offers up to $9,000 of Arizona income or premium tax credits spread over a three year period for each net new quality job. If the allowable tax credit exceeds the income or premium tax liability, any unused amount may be carried forward for up to five consecutive taxable years.
The Qualified Facility tax credit program stimulates job creation and capital investment in the manufacturing sector. The program provides a refundable tax credit for qualifying capital investment made at a manufacturing facility, including a manufacturing-related research or headquarters facility. The credit is equal to the lesser of:
- 10% of the qualifying capital investment, or
- $20,000 per net new job at the facility, or
- $30,000,000 per taxpayer per year
The Research and Development tax credit program 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 R&D tax credit has both non-refundable and refundable programs. The non-refundable credit is administered by the Arizona Department of Revenue. The refundable credit is administered by the Arizona Commerce Authority and is limited to companies with less than 150 full-time employees at all locations, worldwide.
Companies that purchase machinery and equipment used directly in manufacturing in Arizona are exempt from paying sales tax.
Companies that are principally engaged in manufacturing or smelting operations are exempt from paying sales tax on the purchase of electricity or natural gas.
The Commercial/ Industrial Solar Energy Tax Credit is to stimulate the production and use of solar energy in commercial and industrial applications by subsidizing the initial cost of solar energy devices. The tax credit is equal to 10% of the installed cost of the solar energy device not to exceed $25,000 in credits for one building in a single tax year and $50,000 total credits per business per tax year. Tax credits can be used to offset Arizona income tax liability; any unused credit amounts can be carried forward for a five-year period.
The Renewable Energy Tax Incentive program provides tax incentives to businesses in the solar, water, wind, geothermal, biomass, biogas, landfill gas and other non-fossil renewable energy industries expanding or locating in Arizona. Companies that meet the program requirements may be eligible for a property tax reclassification of real and personal property, which effectively constitutes an up to 75% savings in property taxes.