State Credit Name: Research and Development Income Tax Credit

Expiration Date: Permanent
Who Can Apply? Corporations and Flow-Through Entities
Credit Carry Forward: 15 years, but with restrictions based on the tax year the credit was earned.

About the Credit: The 2011 through 2030 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. For 2031 and thereafter, the tax credit rates will be 20% of the first $2.5 million in qualifying expenses plus 11% of the qualifying expenses in excess of $2.5 million.

Notes: The credit is partially refundable beginning in tax year 2011.  The taxpayer may elect to receive 75% of the excess credit refunded and waive the remaining 25% instead of carrying excess credit forward. To be eligible for the refund, the taxpayer must have less than 150 employees, receive a Certificate of Qualification from the Arizona Commerce Authority and have a current year Arizona R&D tax credit that exceeds its current year’s tax liability.

Click here to find out if you are eligible for the federal research credit.