Special 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. For 2031 and thereafter, the tax credit rates will be 20% of the first $2.5 million in qualifying expenses plus 11% of the qualifying expenses in excess of $2.5 million.

Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 3104 E Camelback Road, Phoenix, Arizona provides R&D tax credit consulting and advisory services to Phoenix, Tucson, Mesa, Chandler, Glendale, Scottsdale, Gilbert, Tempe, Peoria and Surprise.

If you have any questions or need further assistance, please call or email our local Arizona Partner on (520) 336-9423.
Feel free to book a quick teleconference with one of our Arizona R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

Arizona R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Arizona, businesses must first ensure their activities meet the criteria for Qualified Research Activities (QRAs) as defined by state and federal guidelines. These activities typically involve experimentation, technological in nature, aimed at developing new or improved products, processes, or software. While the non-refundable portion of the credit is administered by the Arizona Department of Revenue, businesses seeking a partial refund of the credit (available to those with fewer than 150 full-time employees and if their credit exceeds their tax liability) must first apply to the Arizona Commerce Authority (ACA) through their Electronic Application System (EASY) to obtain a Certificate of Qualification. This application to the ACA is a prerequisite and must be completed before the state tax return is filed. Once any necessary certifications are obtained and the qualified expenses are calculated, the credit is formally claimed by filing Arizona Form 308, Credit for Increased Research Activities, with the Arizona Department of Revenue as part of the business’s annual income tax return. For individuals, Form 308-I is used, and S-corporations passing the credit through to shareholders will also use Form 308-S.