Arizona Economic Development Directory

Arizona State Incentives

THE ARIZONA COMPETITIVENESS PACKAGE (HB 2001) is a brand new incentive package which includes the following new incentive programs and updates:

QUALITY JOBS TAX CREDIT 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 3-year period per each new employee and offers a 5-year carry forward provision for any unused tax credits. Eligibility qualifications are different for rural and metro areas. The program is capped at 10,000 new jobs being claimed each year by all participants; whereas a taxpayer is limited to a maximum of 400 new jobs per year.

JOB TRAINING PROGRAM: Originally set to expire in 2011, the Arizona Competitiveness Package extended the program an additional five years until December 31, 2016 and modified the definition of a “rural area.”

$25 MILLION DEAL-CLOSING FUND: Arizona has taken a progressive position by offering attraction funds to companies meeting performance measures that benefit both the company and the citizens of Arizona. Utilization of the Arizona Competes Fund will generate investment in business projects that stimulate and promote industries providing high-wage and stable jobs. In order to assure a return on investment to the state, performance safeguards are a requirement of these funds. To request more information as it becomes available, please click here.

Arizona now offers a 100 PERCENT ELECTABLE SALES TAX FACTOR FOR MULTI-STATE CORPORATIONS. The new legislation increases the electable sales factor for multi-state corporations from 80 percent to100 percent. The increase is to occur in equal increments over a four year period, between 2014 and 2017. This provides businesses with the opportunity to reduce their Arizona tax burden.

30 PERCENT REDUCTION IN ARIZONA’S CORPORATE INCOME TAX RATE: Corporate Income Tax rates will be decreasing in Arizona from 6.97 percent down to 4.9 percent, between 2014 and 2017. This new 30 percent lower rate makes Arizona’s rate one of the five lowest in the country.

PROPERTY TAX REFORM:

• Business: Accelerated Depreciation schedules for prospective acquisitions of commercial personal property have also been improved. Five-year accelerated depreciation schedules have been increased to help companies recover their investments even faster.
• Personal Property Tax Exemption: 15 percent increase in personal property exemptions. The exemption on personal property is currently $67,000; it is being increased to $79,000 beginning in 2011 by using the Employment Cost Index (ECI) rather than the Gross Domestic Product Implicit Price Deflator (GDP IPD).
• Commercial Property: Reduced by 10 percent, the commercial property assessment ratio will be 18 percent by 2017. This continues a 10-year trend of reducing property taxes in Arizona.

EXTENSION OF THE ANGEL INVESTMENT TAX CREDIT PROGRAM: Originally set to expire in 2011, the program is now available until June 30, 2016. Additional improvements to the program include expanded company eligibility and beginning in 2014 elimination of capital gains tax on income derived from investments in companies certified by the ACA.

ENHANCEMENT OF THE RESEARCH & DEVELOPMENT TAX CREDIT PROGRAM: The R&D program now offers up to a 34 percent Arizona income tax credit for R&D made in conjunction with an Arizona public university. Tax credits are based upon R&D increases over prior years.

RENEWABLE ENERGY TAX INCENTIVE PROGRAM:  Encourages business investment that will produce high quality employment opportunities and enhance Arizona’s position as a center for production and use of renewable energy products. The program provides tax incentives to companies in the solar, wind, geothermal and other renewable energy industries who are expanding or locating in AZ. It offers two benefits; up to a 10 percent refundable income tax credit and up to a 75% reduction on real and personal property taxes.

ARIZONA INNOVATION ACCELERATOR FUND: An $18.2 million loan participation program funded through the U.S. Department of Treasury’s SSBCI and managed by the Arizona Commerce Authority. Its goal is to stimulate financing to small businesses and manufacturers, in collaboration with private finance partners, to foster business expansion and job creation in Arizona. The program ends December 2016. Loan proceeds are to be used for working capital, inventory, equipment purchase, and real property improvements but cannot be used for refinancing of existing debt or outstanding debt payments.

COMMERCIAL/INDUSTRIAL SOLAR ENERGY TAX CREDIT PROGRAM: Stimulates the production and use of solar energy in commercial and industrial applications by subsidizing the initial cost of solar energy devices. The program achieves this goal by providing an Arizona income tax credit for the installation of solar energy devices in AZ business facilities. 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.

HEALTHY FOREST ENTERPRISE INCENTIVES PROGRAM (HF): Provides incentives for certified businesses that are primarily engaged in harvesting, initial processing or transporting of qualifying forest products. The program offers the following incentives:

• Transaction Privilege Tax Exemption (TPT Exemption) on purchased qualifying equipment and leased or rented qualifying equipment
• Use Tax Exemption – on qualifying equipment purchased out-of-state
• New Job Income Tax Credit – Arizona income tax credit earned over a three-year period for each net new job created, totaling up to $3,000 per employee