State R&D Tax Credits

Arizona

Credit Name: Form 308 – Credit for Increased Research Activities

Expiration Date: Unknown

Does it apply to C corps and pass-through entities?: Yes

Credit Carry forward: 15 years before 01/01/22, with varying restrictions based on tax year credit was earned. For tax years beginning after 12/31/2021, carry forward is 10 years.

Description:

For tax years beginning before 12/31/2030: Credit is 24% of the first $2.5M in excess QREs, 15% of excess QREs over $2.5M.

For tax years beginning from and after 12/31/2030: Credit is 20% of the first $2.5M in excess QREs, 11% of excess QREs over $2.5M.

The base must be calculated using the traditional method.

Other Notes: Partially refundable beginning tax year 2011. If taxpayer has less than 150 employees, they may elect to receive 75% of excess credit refunded and waive the remaining 25% instead of carrying all excess credit forward. Taxpayer must apply to the Arizona Commerce Authority and receive a Certificate of Qualification related to the credit for increased research activities to be eligible for a refund.