The opportunity to claim an Arizona Refundable Research and Development Tax Credit has been extended another 10 years, to 2030.
The state of Arizona offers both a non-refundable R&D credit and a refundable credit, unlike many other states. It works like this:
The non-refundable credit may be applied to Arizona tax liability on an income tax return. If the taxpayer does not have an income tax liability or cannot apply all of the credit in that tax year, it may either
- carry the credit forward for 14 years to offset any tax incurred in those years, up to the full amount of the credit, OR
- apply to receive a cash refund of 75% of the computed credit.
An application may be submitted as soon as the first business day of the year in which the taxpayer wishes to claim the credit (the next application date is 1/3/2022 for the 2021 tax year). The refundable credit is limited to taxpayers with less than 150 full-time employees worldwide and is capped at $100,000. The credit is subject to an annual ceiling and is awarded first-come, first-serve, so it's best to file on that first day.
The Arizona Commerce Commission issues a certification of the application after a review process. The state awards only $5 million in credits annually. The application process is highly competitive. The Eide Bailly R&D Tax Incentives team can help prepare and file applications.
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