For a list of Arizona economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.
Private Activity Bonds: Issued to finance construction and equipment purchases associated with industrial and manufacturing facilities, residential rental projects, facilities for the furnishing of water, sewage and solid waste facilities and more. Interest on private activity bonds may be exempt from federal income tax for most bondholders.
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UPDATED TAX INCENTIVES
Healthy Forest Enterprise Incentives: Tax incentives provided to certified businesses for their support and operations pertaining to forest improvement in Arizona. Certified businesses are primarily engaged in operations that process, harvest or transport qualified forest products. Multiple tax incentives are available (Transaction Privilege Tax exemptions, property tax reduction, employment income tax credit, etc.)
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Arizona Innovation Challenge (AIC): Bi-annual business plan competition awarding $3 million annually to talented entrepreneurs that are solving today’s most challenging problems with technology-based solutions. In the spring and fall, AIC winners receive up to $250,000 each in capital to grow their businesses, advancing innovation and technology commercialization opportunities in Arizona.
Angel Investment Tax Credit: Subject to funding, an income tax credit of up to 35% is available for investments of at least $25,000 in small businesses certified under the program by the Arizona Commerce Authority. Additionally, capital gains derived from a qualified investment under the Angel program are exempt from taxation in Arizona.
Commercial and Industrial Solar Tax Credit: Income tax credit for businesses installing solar energy devices at Arizona facilities. The tax credit is equal to 10% of the installed cost of the solar energy device, up to $25,000 in credits for one building in a single tax year and $50,000 in total credits per taxpayer per tax year.
Computer Data Center (CDC) Tax Exemptions: Sales and use tax exemptions, for up to 20 years, in connection with purchases of CDC equipment by owners, operators and co-location tenants of computer data centers certified by the Arizona Commerce Authority. Investment requirements at a new or expanding CDC:
- $50 million in new investment if the CDC is located in Maricopa or Pima county; or
- $25 million in new investment if the CDC is located in any other county.
Foreign Trade Zone (FTZ): Up to a 72.2% reduction in state real and personal property taxes for businesses located in an FTZ. Other benefits include: duty free zone, no time constraints on storage, shorter transit time (direct delivery) and weekly entries.
Military Reuse Zone (MRZ): Various incentives for businesses operating in one of two MRZs in Arizona (Williams Gateway Airport in Mesa and Phoenix/Goodyear Airport in Goodyear):
- Transaction Privilege Tax Exemption: Exemption from transaction privilege tax on contracts for certain types of construction at an MRZ.
- Tax Credits: Arizona income/premium tax credits for up to five years for each net new job created, totaling up to $7,500 per non-dislocated employee and up to $10,000 per dislocated employee.
- Property Reclassification: Both real and personal property can be reclassified from class one (18% assessment ratio) to class six (5% assessment ratio), which may result in property tax savings of up to 72.2% for a period of five years.
Qualified Facility Tax Credits: Refundable income tax credit for a manufacturing facility or a manufacturing-related research or headquarters facility. The credit is equal to 10% of the capital investment in a new or expanding facility or $20,000 per qualified new job created, whichever is less. 51% of the new jobs at the facility must pay wages of at least 125% of the state median production wage (100% in rural areas) and offer health insurance for which the employer pays at least 65% of the premiums.
Quality Jobs Tax Credit: $9,000 nonrefundable income tax credit for each qualifying new job, claimed $3,000 per year for three years. Eligibility requirements are as follows:
- Metro locations: Capital investment of at least $5 million and at least 25 qualifying new jobs.
- Rural locations: Capital investment of at least $1 million and at least 5 qualifying new jobs.
Renewable Energy Investment and Production for Self-Consumption by Manufacturers Tax Credit: Nonrefundable income tax credits for manufacturers that, over a three-year period, invest at least $300 million in new renewable energy facilities in Arizona that generate energy for self-consumption using renewable energy resources.
Renewable Energy Production Tax Credit: Nonrefundable income tax credit for utility-scale generation systems based on the amount of electricity produced annually for a 10-year period using solar light, solar heat, wind or certain types of biomass. The income tax credits established are intended to promote investment in renewable energy production using low-emission and zero-emission electricity generation technologies. The credits are only for qualified energy generators with at least 5 megawatts generating capacity.
Renewable Energy Tax Incentive Program: Refundable income tax credit for manufacturing facilities or headquarters facilities for businesses primarily engaged in manufacturing renewable energy equipment. The credit is equal to up to 10% of the capital investment in a new or expanding facility. 51% of the new jobs at the facility must pay wages of at least 125% of the state median and offer health insurance for which the employer pays at least 80% of the premiums.
Research and Development Tax Credit: Income tax credit for investing in R&D in Arizona. The R&D tax credit is equal to 24% of the first $2.5 million in qualifying expenses plus 15% of the qualifying expenses in excess of $2.5 million. The credit is equal to 34% of qualifying expenses when made in conjunction with an Arizona public university. Companies with fewer than 150 employees worldwide can apply to the Arizona Commerce Authority for approval of a refund of 75% of the current year’s excess credit amount in lieu of carrying the excess credit forward.
Sales Tax Exemptions are available for:
- Machinery/Equipment used directly in manufacturing.
- Equipment or transmission lines used directly in producing or transmitting electrical power, but not including distribution.
- Machinery or equipment used in research and development.
- Electricity and natural gas used by businesses principally engaged in manufacturing operations.
Solar Liquid Fuel Tax Credit: Nonrefundable tax credit for increased research and development activity related to solar liquid fuel. The credit is equal to 40% of the amount exceeding the excess, if any, of the qualified research expenses for the taxable year over the base amount as defined in section 41(c) of the internal revenue code.
Robust Workforce Development Assistance: No-cost workforce assistance:
- Immediate access to job-ready talent pools
- Skill assessments and talent screening
- Human Resource consulting on Arizona’s labor laws
- Custom recruiting services
- Transition and retention services
- Training grants for new hires and incumbent employees