If you have conducted business or earned income in Arizona, you may be subject to Arizona state taxes. If this applies to you, please find below the details regarding the R&D tax credit application, key tax deadlines, and extension information for 2024.
In Arizona, businesses aiming to claim the Research & Development tax credit must complete and receive approval for an application.
In Arizona, you may:
File your taxes online with AZTaxes
If filing by mail, ensure that your documents are postmarked by the due date.
Federal filing is not required.
Amendments are allowed up to 4-years from the original date of filing.
Application Information
The Arizona Commerce Authority (ACA) has been given the authority to approve refunds under this program up to $5 million in any calendar year. Therefore, refunds are approved by the ACA on a first-come, first-served basis, according to the date and time an application is filed with the ACA.
Beginning in calendar year 2019, the maximum refund amount per taxpayer is $100,000 in a single tax year.
Here is how you can apply
Here is how you can apply
Apply electronically here: Apply Now (azcommerce.com)
Complete and submit the electronic form and a unique username and password will be emailed to you within 2 business days.
Please note: the application system is structured in such a way that each application must be submitted via the company who will receive the incentive.
If you are utilizing a third party (i.e. consultant, tax preparer or other) to apply for incentives, please identify the entity in the shaded fields below, otherwise, type N/A in these fields.
Applications must be based on actual numbers, not estimates.
Overview, Eligibility, Limitations, and Allocation Cap
Overview, Eligibility, Limitations, and Allocation Cap
Research and Development Program
The Research and Development Tax Credit program provides an Arizona income tax credit for increased research and development activities conducted in the state.
Eligible Entities
C-Corporations, S-Corporations, LLCs, Partnerships
Credit Carryforward
For taxable years beginning before January 1, 2022, the R&D credit claimed that is not used to offset taxes may be carried forward 15 years.
For taxable years beginning from and after December 31, 2021, the R&D credit claimed that is not used to offset taxes may be carried forward 10-years.
If the taxpayer received a refund of 75% of the excess credit, the taxpayer does not have any excess amount to carryforward for this year.
Any carryover amounts from previous taxable years must be carried over to the next taxable year, subject to the 15-year carryover period and annual limitations on the use of those carryovers.
Allocation Cap
The goal of the program is to encourage Arizona businesses to continue investing in research and development activities. The Research & Development program has both a nonrefundable and a refundable component.
The nonrefundable credits are administered by the Arizona Department of Revenue and applies to the University R&D Tax Credit. The annual cap is $10 million.
The refundable credits are administered by the Arizona Commerce Authority and applies to small businesses. The annual cap is $5 million.
Nonrefundable – University R&D Tax Credit
Nonrefundable – University R&D Tax Credit
For tax years beginning on or before December 31, 2021, the R&D tax credit percentages are 24% of the first $2.5 million in qualifying expenses plus 15% of the qualifying expenses in excess of $2.5 million.
For taxable years beginning January 1, 2022, and thereafter, the R&D tax credit percentages will be 20% of the first $2.5 million in qualifying expenses plus 11% of the qualifying expenses in excess of $2.5 million.
The unused portion of the credit can be carried forward for 5 years.
Refundable – Research and Development Program
Refundable – Research and Development Program
A taxpayer that is otherwise qualified for the nonrefundable R&D tax credit and who employs fewer than 150 full-time employees worldwide can apply to the Authority for approval of a refund of 75% of the current year’s excess credit amount.
The Arizona Commerce Authority may approve refunds under this program in an amount up to $5 million in any calendar year. Refunds are approved by the Authority on a first come, first served basis, according to the date and time stamp on the Application submitted to the Authority.
The taxpayer must remit a non-refundable processing fee equal to 1% of the company’s tax credit being refunded.
The credit is refundable but limited to the maximum refund amount of $100,000 per taxpayer in a single tax year.
The calendar year 2024 cap of $5 million has been fully allocated.
For Calendar Year 2025 applications, it is highly recommended to file on the morning of the first business day of 2025 (January 2, 2025, 8:00 A.M. Arizona Time) via the Arizona Commerce Authority's Electronic Application System. See link above.
Historically, the application pool has been fully allocated within the first few hours of the application opening.
S-Corporation / Partnership
You must file in Arizona by March 15, 2025.
Applicable R&D Forms
Form 308 – Credit for Increased Research Activities
File the above form with the following tax forms:
Form 120S – S-Corporation Income Tax Return
Form 165 – Partnership Income Tax Return
Extension to File Taxes in Arizona for 2024
Taxes owed in Arizona for the tax year 2024 must be paid by March 15, 2025.
No separate extension filing is required in Arizona.
Arizona automatically grants a 6-month extension for both S-Corporation and Partnership tax returns.
S-Corporation: the extension deadline is September 15, 2025.
Partnership: the extension deadline is September 15, 2025.
Note that this extension pertains to the filing deadline, not the payment deadline.
Payment of taxes owed is still due by March 15, 2025.
Flow Through Entity
If two or more taxpayers, including partners in a partnership and shareholders of an S-Corporation, as defined in section 1361 of the internal revenue code, share in the eligible expenses, each taxpayer is eligible to receive a proportionate share of the credit.
C-Corporation
You must file in Arizona by April 15, 2025.
Applicable R&D Forms
Form 308 – Credit for Increased Research Activities
File the above form with the following tax forms:
Form 120 – Arizona C-Corporation Income Tax Return
Extension to File Taxes in Arizona for 2024
Taxes owed in Arizona for the tax year 2024 must be paid by April 15, 2025.
No separate extension filing is required in Arizona.
Arizona automatically grants a 6-month extension for C-Corporation tax returns.
C-Corporation: the extension deadline is October 15, 2025.
Note that this extension pertains to the filing deadline, not the payment deadline.
Payment of taxes owed is still required by April 15, 2025.
Sole-Proprietorship
Sole-Proprietorship
You must file in Arizona by April 15, 2025.
Applicable R&D Forms
Not eligible
These are the forms when filing a tax return as a sole proprietor
Form 140 – Resident Personal Income Tax Form
Extension to File Taxes in Arizona for 2024
Taxes owed in Arizona for the tax year 2024 must be paid by April 15, 2025.
No separate extension filing is required in Arizona.
Arizona automatically grants a 6-month extension for individual tax returns.
Sole-Proprietorship: the extension deadline is October 15, 2025.
Note that this extension pertains to the filing deadline, not the payment deadline.
Payment of taxes owed is still required by April 15, 2025.
References
We strive to ensure the accuracy of the information on this page, but it is not intended as tax or legal advice. Please use your own professional judgment and consult with a tax professional. Any advice you provide in connection with tax return preparation must comply in full with the requirements of IRS Circular 230.