State Credit Name: Research & 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: For 2011-2017, the credit is 24% of the first $2.5 million in excess QRE’s, 15% of excess QRE’s over $2.5 million. The base amount has to be calculated using the traditional method. For tax years 2018 and after, the credit will be 20% for the first $2.5 million in QRE’s and 11% for amounts that exceed $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.

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