June 2026: 3.39% (A+ grade)

Arizona inventionINDEX June 2026: 3.39% (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).

Historical Arizona inventionINDEX Scores

The Arizona inventionINDEX score for the past 12 months is shown in the table below.

Over the 60-month historical period from June 2021 to June 2026, the Arizona inventionINDEX exhibits a dynamic trajectory characterized by cyclical shifts and notable milestones. The June 2026 score of 3.39% with an A+ rating reflects a solid upward trajectory compared to the broader historical baseline. Throughout this five-year timeline, the index reached its highest mark in January 2024 at an extraordinary 7.25% with an A+ rating, while experiencing its lowest point in July 2023 at 1.44% with a C+ rating. Comparing recent months against these historical benchmarks demonstrates that while current scores remain below the early 2024 high point, the state is performing well above its multi-year average.

Examining short-term movements within the 60-month dataset reveals a recurring pattern of brief contractions followed by steady recoveries. Early 2026 demonstrated this resilience clearly, as the index climbed from an April score of 2.09% (B rating) to 3.15% in May (A rating) and 3.39% in June (A+ rating). Similar mid-year expansion phases are visible across prior years, such as July 2025 reaching 4.18% and August 2023 scoring 3.51%. Across the sixty months evaluated, the majority of scores cluster within the 2.20% to 3.50% range, establishing a stable core around the B+ to A letter grades and showing that the regional innovation engine maintains sustained baseline strength despite periodic adjustments.

Higher inventionINDEX scores and top-tier ratings yield significant economic and operational benefits for Arizona. When the state achieves A or A+ marks, it indicates that patent filings and intellectual property output are expanding faster than standard economic baselines. This elevated sentiment signals a healthy research climate to external venture capital firms, encouraging increased private investment and corporate R&D spending. Furthermore, higher scores correlate with faster commercialization of research discoveries, increased high-tech job creation, and optimal utilization of state and federal R&D tax incentives that fuel continued technological progress.

Conversely, lower scores and depressed ratings carry clear negative implications for the state’s economic development. Periods of reduced performance, such as the C+ ratings observed in July 2023 (1.44%) or October 2022 (1.66%), highlight underlying friction within the innovation pipeline, including research funding cutbacks, administrative backlogs, or macroeconomic uncertainty. If lower scores persist over extended periods, regional momentum can stall, resulting in dampened investor sentiment, reduced startup formation, and potential loss of talent to competing tech hubs. Monitoring these downturns provides key insights for leadership to refine policy interventions and reinforce research support before short-term drops become structural challenges.

Discussion:

In June, the Arizona inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is in contrast to the prior 12 months, which experienced an 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.