ARIZONA INVENTIONINDEX | MAY 2025

May 2025: 3.77% (A+ grade)

Arizona inventionINDEX May 2025: 3.77% (A+ grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

The May 2025 inventionINDEX Score for Arizona stands at 3.77%, marking the highest point recorded in the last twelve months. This is a significant increase from the previous month’s score of 2.57%, representing a surge of 1.20 percentage points. This uptick not only positions Arizona at the peak of innovation activity for the year but also indicates a robust resurgence following several months of relatively moderate performance. Historically, only October 2024 (3.29%) and July 2024 (3.08%) came close to this level, further underscoring the strength of the latest score.

Such a high inventionINDEX Score typically reflects heightened patenting activity, successful commercialization of technologies, and increased venture interest in local innovations. For Arizona, this may suggest an influx of research funding, the emergence of strong university-industry partnerships, or a wave of productive entrepreneurship. These developments can boost the state’s competitive edge, attract high-tech employers, and stimulate overall economic growth. Moreover, the positive momentum may enhance Arizona’s reputation as a fertile ground for innovators and investors seeking scalable opportunities.

Conversely, the lower scores seen throughout parts of 2024—such as 2.21% in November and 2.38% in August—may have reflected temporary slowdowns in patent submissions, investment hesitations, or regulatory uncertainties. Periods of stagnation in innovation activity can lead to lost momentum, making it more challenging for local startups to secure funding or for institutions to retain top talent. Sustained lower inventionINDEX scores could also hint at systemic issues, such as insufficient support infrastructure or policy barriers that deter innovation.

The current rebound suggests that Arizona may have effectively addressed prior challenges or capitalized on emerging sectors. Whether driven by new policy initiatives, academic breakthroughs, or startup accelerators, the trend line now points to a period of renewed vigor in the innovation ecosystem. Maintaining this upward trajectory, however, will require sustained investment, long-term strategic planning, and agile responses to both domestic and global innovation trends.

Discussion:

In May, the Arizona inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the upward trend for the year. This is similar to the prior 12 months, which experienced a considerable upward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Arizona office provides R&D tax credit consulting and advisory services to Phoenix, Tucson, Mesa, Chandler, Glendale, Scottsdale, Gilbert, Tempe, Peoria and Surprise.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.