Arizona Tax-Friendly Programs & Credits

In response to calls from the Arizona business community for streamlined regulation, the Governor and Legislature approved fundamental changes in the administration of Arizona’s transaction privilege tax system. These changes streamline tax collection and eliminate the need for multiple (state and local) tax licenses, tax returns, and tax audits.

Arizona is a top 10 most friendly tax state with the 6th lowest corporate tax rate in the nation.  There is no franchise tax, business inventory tax, or real estate state tax. Businesses with multi-state operations will appreciate the transition to a 100% sales factor income appointment formula. Arizona's enhanced accelerated depreciation program for real and personal property of businesses can also dramatically reduce operating costs, and the Arizona Competitiveness package enhances the state’s additional depreciation allowance for property tax.  Arizona will also implement a simplified flat income tax rate of 2.5% (4.5% top rate), which is the lowest in the U.S.

For taxpayers expanding or locating a qualified manufacturing facility, which includes manufacturing related research & development or headquarters facilities in Arizona, the state legislature established the Qualified Facility Tax Credit Program.

The Angel Investment Program provides tax credits to investors who make capital investment in small businesses certified by the Arizona Commerce Authority.

The Quality Jobs Tax Credit program provides tax credits to employers creating a minimum number of net new quality jobs and making a minimum capital investment in the state. In addition, the Quality Jobs tax credit provides income tax credits of up to $9,000 for each new qualifying job created.

AZ is a state thriving with innovation and technology. Companies focused on research and computer equipment upgrades can take advantage of the Research and Development Tax Credit program. That includes research conducted at a state university and research funded by the company.

The Computer Data Center Program provides Transaction Privilege Tax (TPT) and Use Tax exemptions at the state, county and local levels on qualifying purchases of computer data center equipment.

Other specialized benefits in the simplified tax system include the Government Property Lease Excise Tax Program.  This program reduces a project’s operating costs by replacing the real property tax with an excise tax on land and improvements conveyed to a government entity and leased back for private use; and the Military Reuse Zone program, with tax benefits for airport authorities and aviation or aerospace companies that locate in the vicinity of a former Arizona military base.