ARIZONA INVENTIONINDEX | SEPTEMBER 2025

September 2025: 3.03% (A grade)

Arizona inventionINDEX September 2025: 3.03% (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).

Arizona inventionINDEX Scores – Last 12 months

The Arizona inventionINDEX for September 2025 stands at 3.03%, earning an ‘A’ grade. This score indicates a positive sentiment regarding innovation output in the state. While this is a strong performance, it is slightly lower than the previous month’s 3.24% and notably below the July 2025 peak of 4.18%, which achieved an ‘A+’ rating. Observing the past 12 months, the September 2025 score is higher than the average for the preceding year, suggesting a general improvement in the state’s innovation landscape compared to earlier periods.

A consistently higher inventionINDEX score, particularly those earning ‘A’ or ‘A+’ grades, signifies robust economic health driven by innovation. A strong score suggests a thriving environment where GDP growth is effectively supported by patent production growth, indicating a dynamic and forward-thinking economy. Such positive sentiment can attract investment, foster new businesses, and create job opportunities, ultimately contributing to sustained economic recovery and prosperity. States with a strong inventionINDEX are better positioned to navigate economic shifts and maintain competitive advantages.

Conversely, lower scores, such as those in the ‘B’ or ‘C’ range, imply a less favorable outlook. For instance, the 1.44% ‘C+’ in July 2023 or the 1.59% ‘C+’ in April 2022 highlight periods where innovation output did not keep pace with economic growth, or where patent production growth was comparatively subdued. These lower grades can signal potential challenges in economic recovery, a slowdown in research and development, or a less innovative business climate. Prolonged periods of lower scores could deter investment and hinder long-term economic resilience.

Analyzing the 60-month historical data reveals fluctuations, with periods of strong performance interspersed with more modest results. The current ‘A’ grade for September 2025, while positive, indicates a slight dip from the immediate preceding months. Maintaining and improving upon these higher grades is crucial for Arizona to continue its trajectory of economic recovery and innovation-driven growth. Understanding these trends allows for strategic interventions to bolster areas where the innovation index might be lagging, ensuring a more stable and prosperous future.

Discussion:

In September, the Arizona inventionINDEX scored a positive sentiment which was higher than the previous year’s average but underperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a considerable downward 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.