February 2026: 2.60% (B+ grade)
Arizona inventionINDEX February 2026: 2.60% (B+ 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 |
| February 2026 | 2.60% |
| Jan 26 | 2.28% |
| Dec 25 | 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% |
The February 2026 Arizona inventionINDEX score of 2.60 percent, earning a B+ rating, represents a moderate recovery from the January 2026 figure of 2.28 percent. While this uptick indicates a positive shift in the short term, the score remains lower than the levels seen in February of the two previous years, which recorded 2.98 percent and 3.27 percent respectively. This current performance suggests a stabilization of activity within the region after a slight dip at the start of the year, positioning the state within a consistent B to A- range that has characterized much of the recent reporting period.
Reflecting on the broader historical context of the last 60 months, the Arizona index has demonstrated significant volatility, reaching an exceptional peak of 7.25 percent in January 2024. Conversely, the market experienced a notable low in July 2023, when the score dipped to 1.44 percent with a C+ rating. Despite these extremes, the average score over the five-year period has remained near 2.79 percent, indicating that the local ecosystem for invention and development is generally resilient. The frequent appearance of A and A+ ratings throughout 2024 and 2025 highlights specific windows of high performance that the state continues to pursue.
Achieving higher grades, such as the A- and A+ ratings frequently observed in the data, brings substantial benefits to the regional economy. High scores serve as a strong signal to venture capitalists and corporate partners that Arizona possesses a robust infrastructure for innovation and a high capacity for generating intellectual property. These elevated levels of activity often lead to increased job creation in high-tech sectors, greater revenue from patent licensing, and a more competitive standing on the national stage. A high index score essentially validates the state’s investment in research and development, fostering an environment where new ideas can transition into viable commercial products.
On the other hand, sustained lower scores or ratings below the B level can carry negative implications for the state’s growth trajectory. A downward trend often indicates a cooling of the innovation pipeline, which may result from reduced research funding, a loss of skilled talent to other regions, or a lack of institutional support for new ventures. When the index remains stagnant at lower percentages, it can discourage external investment and slow the pace of economic diversification. To maintain its status as a technological leader, Arizona must monitor these lower-performing months closely to address underlying challenges in the business and scientific community before they lead to long-term decline.
Discussion:
In February, 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 slight 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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