SPOTLIGHTPROGRAMS

Quality Jobs Tax Credit: This program offers corporate income or premium tax credits of up to $9,000 per job, spread over a three-year period, are available to businesses that make capital investments and create jobs that meet specific wage requirements. To participate in the program, eligibility business must satisfy applicable capital investment, job creation, and wage thresholds based on the project’s city and county. Tax credits are non-refundable and non-transferable. Unused credits can be carried forward for up to 5 consecutive tax years. The program is capped at 10,000 jobs being claimed by all applicants each year and are allocated on a first-come, first-served basis.

Qualified Facility Tax Credit: Refundable tax credits are available to qualified businesses that make a minimum $250,000 of capital investment to establish or expand manufacturing, corporate headquarters, or R&D-related manufacturing facilities. To qualify for the incentive, at least 51% of the net new full-time jobs must have wages at or above 125% of the Arizona median wage for production occupations (reduced to 100% of the median wage if the project is located in a rural area). Tax credits are authorized on a first-come, first-served basis. Tax credits are claimed in five equal installments over five consecutive taxable years.

TAX CREDITS

Research and Development Income Tax Credit: Provides non-refundable state income tax credits for qualified R&D activity in Arizona. Through 2030, this credit is equal to 24% of the first $2.5 million of qualifying expenses plus 15% of the qualifying expenses in excess of $2.5 million. Starting in 2031, these rates will change to 20% of the first $2.5 million plus 11% in excess of $2.5 million. A company that is otherwise qualified and has fewer than 150 full-time employees can apply for a partial refund of 75% of the excess credit amount. An additional credit equal to 10% of the basic research payments made to an Arizona state university is available.

Angel Investment Tax Credit: Provides a tax credit of 30% or 35%of eligible investment in a qualified small bioscience or rural business. There is an annual limitation of $2.5 million in tax credits, with applications reviewed on a first-come-first-served basis. Tax credits can be claimed over a three-year period. Unused credits can be carried forward for three years. The program is currently extended through 2031.

Tax Exemptions

Sales Tax Exemption: Machinery and equipment used directly in manufacturing or research and development at qualifying facilities are exempt from the state sales tax. Purchases of electricity and natural gas used by qualified manufacturing or smelting businesses are exempt from state and county sales tax.  

Computer Data Center Tax Exemption: A capital investment made to establish or expand a data center that exceeds $25 million ($50 million in Maricopa and Pima counties) is eligible for Transaction Privilege Tax (TPT) and Use Tax exemptions for up to 20 years. The definition of eligible capital investment was recently expanded to include leased land, buildings, modular data centers, and computer data center equipment.

DIRECT FINANCIAL ASSISTANCE

Arizona Competes Fund: Deal closing fund that awards discretionary grants to businesses that create new jobs with wages at or above the median county wage. At least 25% of funding appropriated each year is restricted to business attraction and expansion projects located on tribal lands or outside of Maricopa County (Phoenix), or both, and 30% is reserved for rural and small business grants. Businesses that locate or expand in counties along the Arizona-Mexico border, counties with military facilities, and on tribal lands are given priority consideration for funding.

JOB TRAINING

Incumbent Workforce Training Program: This program is a public-private partnership designed to help existing workforce obtain skills to avoid layoffs. Training is carried out by local workforce development boards with the help of employers.  

Customized Training Program: The program is designed to meet specific requirements of an employer or group of employers. The employee training must be related to new production or service procedures, upgrading to new jobs requiring new skills, workplace literacy, or other purposes approved by the workforce board. Employers must commit to employ individuals who complete the training.  

On-the-Job Training: Some businesses may qualify to receive reimbursement for staff engaged in productive work while participating in on-the-job training.

Last updated: January 2026

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