For official information for tax credits go to this site for Arizona Department of Revenue > https://www.azdor.gov/TaxCredits.aspx
information for this post is taken from https://businessfacilities.com
Arizona Incentives and Workforce Development Guide
Please Note: UPDATED FINANCING
Private Activity Bonds: Issued to finance construction and equipment purchases associated with industrial and manufacturing facilities, residential rental projects, facilities for the furnishing of water, sewage and solid waste facilities and more. Interest on private activity bonds may be exempt from federal income tax for most bondholders.
Angel Investment Tax Credit: Subject to funding, an income tax credit of up to 35% is available for investments of at least $25,000 in small businesses certified under the program by the Arizona Commerce Authority. Additionally, capital gains derived from a qualified investment under the Angel program are exempt from taxation in Arizona.
Commercial and Industrial Solar Tax Credit: Income tax credit for businesses installing solar energy devices at Arizona facilities. The tax credit is equal to 10% of the installed cost of the solar energy device, up to $25,000 in credits for one building in a single tax year and $50,000 in total credits per taxpayer per tax year.
Computer Data Center (CDC) Tax Exemptions: Sales and use tax exemptions, for up to 20 years, in connection with purchases of CDC equipment by owners, operators and co-location tenants of computer data centers certified by the Arizona Commerce Authority. Investment requirements at a new or expanding CDC:
- $50 million in new investment if the CDC is located in Maricopa or Pima county; or
- $25 million in new investment if the CDC is located in any other county.
Foreign Trade Zone (FTZ): Up to a 72.2% reduction in state real and personal property taxes for businesses located in an FTZ. Other benefits include: duty free zone, no time constraints on storage, shorter transit time (direct delivery) and weekly entries.
Military Reuse Zone (MRZ): Various incentives for businesses operating in one of two MRZs in Arizona (Williams Gateway Airport in Mesa and Phoenix/Goodyear Airport in Goodyear):
- Transaction Privilege Tax Exemption: Exemption from transaction privilege tax on contracts for certain types of construction at an MRZ.
- Tax Credits: Arizona income/premium tax credits for up to five years for each net new job created, totaling up to $7,500 per non-dislocated employee and up to $10,000 per dislocated employee.
- Property Reclassification: Both real and personal property can be reclassified from class one (18% assessment ratio) to class six (5% assessment ratio), which may result in property tax savings of up to 72.2% for a period of five years.
Qualified Facility Tax Credits: Refundable income tax credit for a manufacturing facility or a manufacturing-related research or headquarters facility. The credit is equal to 10% of the capital investment in a new or expanding facility or $20,000 per qualified new job created, whichever is less. 51% of the new jobs at the facility must pay wages of at least 125% of the state median production wage (100% in rural areas) and offer health insurance for which the employer pays at least 65% of the premiums.
Quality Jobs Tax Credit: $9,000 nonrefundable income tax credit for each qualifying new job, claimed $3,000 per year for three years. Eligibility requirements are as follows:
- Metro locations: Capital investment of at least $5 million and at least 25 qualifying new jobs.
- Rural locations: Capital investment of at least $1 million and at least 5 qualifying new jobs.
Renewable Energy Investment and Production for Self-Consumption by Manufacturers Tax Credit: Nonrefundable income tax credits for manufacturers that, over a three-year period, invest at least $300 million in new renewable energy facilities in Arizona that generate energy for self-consumption using renewable energy resources.
Renewable Energy Production Tax Credit: Nonrefundable income tax credit for utility-scale generation systems based on the amount of electricity produced annually for a 10-year period using solar light, solar heat, wind or certain types of biomass. The income tax credits established are intended to promote investment in renewable energy production using low-emission and zero-emission electricity generation technologies. The credits are only for qualified energy generators with at least 5 megawatts generating capacity.
Renewable Energy Tax Incentive Program: Refundable income tax credit for manufacturing facilities or headquarters facilities for businesses primarily engaged in manufacturing renewable energy equipment. The credit is equal to up to 10% of the capital investment in a new or expanding facility. 51% of the new jobs at the facility must pay wages of at least 125% of the state median and offer health insurance for which the employer pays at least 80% of the premiums.
Research and Development Tax Credit: Income tax credit for investing in R&D in Arizona. The R&D tax credit is equal to 24% of the first $2.5 million in qualifying expenses plus 15% of the qualifying expenses in excess of $2.5 million. The credit is equal to 34% of qualifying expenses when made in conjunction with an Arizona public university. Companies with fewer than 150 employees worldwide can apply to the Arizona Commerce Authority for approval of a refund of 75% of the current year’s excess credit amount in lieu of carrying the excess credit forward.
Sales Tax Exemptions are available for:
- Machinery/Equipment used directly in manufacturing.
- Equipment or transmission lines used directly in producing or transmitting electrical power, but not including distribution.
- Machinery or equipment used in research and development.
- Electricity and natural gas used by businesses principally engaged in manufacturing operations.
Solar Liquid Fuel Tax Credit: Nonrefundable tax credit for increased research and development activity related to solar liquid fuel. The credit is equal to 40% of the amount exceeding the excess, if any, of the qualified research expenses for the taxable year over the base amount as defined in section 41(c) of the internal revenue code.
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For a list of Arizona economic development agencies that can help with the site selection process, visit Online Site Seekers’ Guide .
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MESA: STRATEGIC LOCATION FOR TECH COMPANIES
The Grand Canyon State has a robust ecosystem that attracts early-stage entrepreneurs and tech-savvy talent to a wide range of growth sectors.
By the BF Staff
From the July/August 2017 Issue Business Facilities online
Boasting a population of nearly 500,000, Mesa is the 36th largest city in the United States and second largest in the Phoenix-Mesa metro area. Larger than Miami and Atlanta, Mesa is home to major operations for companies such as Apple, Boeing, Bridgestone, FUJIFILM, Mitsubishi, and Infineon.
> Recently, the metro area was ranked second in the nation for its tech sector job growth by CBRE.
> With more than 1,200 aerospace and defense companies in Arizona, it is easy to understand why PriceWaterhouseCoopers ranked Arizona number one for aerospace manufacturing attractiveness.
In fact, the Arizona/Sonora, Mexico region makes up the fourth-largest aerospace supply chain in the world and the largest in North America.
In Mesa, Boeing employs more than 3,700 people at its 2-million-square-foot facility to build Apache attack helicopters for the U.S. Army and other foreign militaries.
Boeing will add hundreds of additional employees to its Mesa operations as it moves some of its internal services from Seattle. The facility also produces electric and composite products and is the primary global services and support center for Boeing’s rotorcraft.
Across the street is the global headquarters for the major rotorcraft manufacturer, MD Helicopters, which builds high-performance helicopters for both civilian and military use worldwide.
Textron Aviation operations of Able Aerospace and Cessna/Citation also call Mesa home, along with other international players including Orbital ATK, Embraer, Nammo Talley, Lockheed Martin, AeroMaritime and Heliponents, among others.
> Mesa is an important player in the medical device sector with companies such as Ulthera (a Merz company), Auer Precision, EyeTech Systems, Banner Simulation Center, Paragon Vision Sciences, Ardent Sound, and many others.
The most recent addition to Mesa’s medical device cluster is Dexcom, a leader in continuous glucose monitoring (CGM) for patients with diabetes. The company recently built out a 216,000-square-foot, state-of-the-art manufacturing facility in Mesa, which will create more than 500 jobs.
> Mesa has one of the nation’s most unique cybersecurity assets—
Arizona Laboratory for Security and Defense Research (AZLabs).
After leasing the U.S. Air Force Research Laboratory for several years, the City purchased the facility in 2014, renamed it, and retained its high security protocols.
Today, the facility is certified at the highest level of cybersecurity and is host to the Arizona Cyber Warfare Range, and other companies conducting highly sensitive projects, research, and cybersecurity activities.
AZLabs is located adjacent to the Phoenix-Mesa Gateway Airport making it a strategic location for unmanned and autonomous vehicle research and operations.
> In 2015, Apple decided to put its $2 billion, 1.3-million-square-foot global command center in Mesa’s Elliot Road Technology Corridor; a key factor was the Corridor’s robust infrastructure.
The Corridor has significant power, water and wastewater; lit and dark fiber; natural gas; more than a thousand acres of shovel-ready land; and the City offers an expedited entitlement process.
> In addition, Mesa has been ranked the nation’s safest location from natural disaster, making it ideal for data centers.
> Mesa is home to large facilities for Infineon, a Germany-based world leader in semiconductor solutions; FUJIFILM Electronic Materials and Mitsubishi Gas Chemicals, manufacturers of products used in the production of semiconductors; and many other high-tech manufacturers.
> Phoenix-Mesa metro boasts a workforce of more than 2.2 million.
Moreover, The Phoenix East Valley region, anchored by Mesa, has a much higher educational attainment rate than the national average.
Furthermore, Arizona is a right-to-work state with
- a very low unionization rate
- one of the lowest unemployment insurance tax rates in the nation
- workers compensations rates that are much lower than the national average.
In 2016, U.S. News & World Report ranked Arizona State University (ASU) as the nation’s most innovative school for the second year in a row.
ASU Polytechnic campus, located in Mesa, serves as host to the Southwest’s largest 3-D printing research facility with more than $2 million in cutting-edge plastic, polymer, and metal 3-D printing equipment and advanced processing and analysis capabilities. Honeywell Aerospace is a partner in the venture.
Mesa has invested significantly in infrastructure, especially in dark and lit fiber and underground conduit well-suited to technology companies needing robust connectivity such as Apple’s new global command center and Santander Consumer USA’s back-office operation.
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