ARIZONA INVENTIONINDEX | DECEMBER 2025
December 2025: 2.79% (A- grade)
Arizona inventionINDEX December 2025: 2.79% (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
| Month | inventionINDEX Score |
| December 2025 | 2.79% |
| Nov 25 | 2.76% |
| Oct 25 | 2.31% |
| Sep 25 | 3.03% |
| Aug 25 | 3.24% |
| Jul 25 | 4.18% |
| Jun 25 | 2.24% |
| May 25 | 3.77% |
| Apr 25 | 2.57% |
| Mar 25 | 2.74% |
| Feb 25 | 2.98% |
| Jan 25 | 2.79% |
| Dec 24 | 2.79% |
The Arizona inventionINDEX concluded December 2025 with a score of 2.79 percent, maintaining a consistent A- rating. This performance mirrors the index’s position at the start of the year in January 2025 and is identical to the close of 2024. This stability suggests that the state’s innovation ecosystem has reached a sustainable equilibrium after several years of periodic fluctuation. Throughout 2025, the index averaged approximately 2.95 percent, demonstrating a resilient environment for intellectual property development and creative enterprise despite broader economic shifts.
Looking at the broader historical context of the past sixty months, the index has navigated significant peaks and troughs. The most notable performance occurred in January 2024, when the score reached a remarkable five-year high of 7.25 percent. Conversely, the data shows the lowest point occurred in July 2023 at 1.44 percent. The recent trend indicates a maturation of the market, as the volatility seen between 2021 and 2023 has largely transitioned into more predictable, high-performing output. This maturation is evident in the frequency of A-range ratings, which have increasingly become the standard over the last twenty-four months.
A higher inventionINDEX grade, such as the A+ achieved in July 2025 with a score of 4.18 percent, yields substantial benefits for the regional economy. These elevated scores typically correlate with a surge in patent filings, increased research and development funding, and a robust pipeline of technological advancements. Such a healthy innovation climate attracts significant venture capital and high-skill talent to the state, fostering a virtuous cycle of growth. When Arizona consistently earns top-tier ratings, it solidifies its reputation as a leading hub for inventors, providing a distinct competitive edge in the global marketplace.
In contrast, periods characterized by lower scores or ratings in the B and C categories present distinct challenges for the state’s economic trajectory. A dip toward the two percent threshold, as seen in October 2025 or during the troughs of late 2022, can signal a temporary slowdown in creative output or a potential bottleneck in the commercialization of new ideas. Such declines often necessitate a reevaluation of policy incentives and investment strategies to prevent long-term stagnation. Without a commitment to maintaining high scores, the state risks losing its momentum to emerging regional competitors, emphasizing the importance of sustained support for the innovation sector.
Discussion:
In December, the Arizona inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is similar 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.
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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.
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What is the R&D Tax Credit?
The Research & Experimentation Tax Credit (or R&D Tax Credit), is a general business tax credit under Internal Revenue Code section 41 for companies that incur research and development (R&D) costs in the United States. The credits are a tax incentive for performing qualified research in the United States, resulting in a credit to a tax return. For the first three years of R&D claims, 6% of the total qualified research expenses (QRE) form the gross credit. In the 4th year of claims and beyond, a base amount is calculated, and an adjusted expense line is multiplied times 14%. Click here to learn more.
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