Quality Jobs Tax Credit: 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. The program was modified in 2017 to allow businesses that make lower capital investments but create higher paying jobs to be eligible for the incentive.
Businesses that locate or expand in urban areas must meet one of the following capital investment, job creation, and wage requirements to participate in the program:
Businesses that locate or expand in rural areas must meet one of the following capital investment, job creation, and wage requirements to participate in the program:
Tax credits are non-refundable and non-transferrable. Unused credits can be carried forward for up to 5 consecutive tax years. The credits are 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 and create net new full-time jobs at manufacturing, corporate headquarters or R&D-related manufacturing facilities (devoting at least 80% pf the facility’s property and payroll to such activities). 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 median wage if project is located in rural area) and the company must pay at least 65% of employee’s health insurance premiums or membership costs. A maximum of $70 million per year in tax credits will be awarded through 2022. Tax credits are authorized on a first-come, first-served basis with the maximum credit amount equal to the lesser of: 10% of the total qualified investment made at the facility; or $20,000 per qualified job created; or $30 million per taxpayer, per year. Tax credits are claimed in 5 equal installments over 5 consecutive taxable years.
Research and Development Income Tax Credit: Provides refundable and non-refundable state income tax credits for qualified R&D activity in Arizona. The amount of the R&D tax credit generally corresponds to 15% of the excess amount above $2.5 million of qualified research expenditures. An additional tax credit amount is permitted for R&D activities at an Arizona state university. Only taxpayers with fewer than 150 employees can qualify for refundable tax credits, which are limited to a total of $5 million per year and are allocated on a first-come, first-served basis. The maximum available to any single taxpayer is $100,000.
Sales Tax Exemption: Machinery and equipment used directly in manufacturing or research and development are exempt from the state sales tax. Purchases of electricity and natural gas used by qualified manufacturing or smelting businesses are exempted from state and county sales taxed. To qualify a business must export out-of-state 51% or more of its product; or derive at least 51% of Arizona gross income from manufacturing or smelting; or use at least 51% of its Arizona facility for manufacturing or smelting operations; or employ at least 51% of its Arizona workforce in manufacturing or smelting.
Computer Data Center Tax Exemption: A capital investment made in the establishment or expansion of 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.
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. 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.
Arizona Job Training Grant: The Arizona Job Training Grants Program provides grants, on a competitive application basis, to assist companies with training expenses of Qualifying Employees. Training Program grants reimburse up to 75% of the approved training costs for net new Qualifying Employees, up to $5,000 for each Qualifying Employee for companies located in urban areas ($8,000 in rural areas). Each grant for net new full-time employees covers up to a two-year hiring and training cycle. The Program is slated for termination on December 31, 2020, after which time no new grants will be issued; grants issued on or before, and terminating after, December 31, 2020 will remain in effect through their respective contractual end date. Grants will be funded to a maximum of $1.3 million per grant per applicant per year. The total grant capacity for 2019 is approximately $11 million.