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Arizona State R&D Tax Credit

Refundable Tax Credit – Yes

Businesses can take advantage of the Research and Development Tax Credit in the state of Arizona. Companies can use the credits to offset costs spent performing qualifying research activities against state and federal tax liabilities. The credit is often overlooked by companies simply because they don’t realize the work they are doing in their daily operations qualifies them. Companies performing any kind of research and development may be missing out on significant tax credits.

Businesses in Arizona can take advantage of the federal R&D Tax credit, as well as credits specific to Arizona state.

Arizona State R&D Tax Credit Program Highlights

  • The state of Arizona has both a fundable and nonrefundable R&D credit. The refundable credit amounts are capped to $5 million in any calendar year.
  • The refundable tax credit amount is 75% of the excess of the allowable credit that exceeds the taxpayer’s tax liability.
  • Unused credits can be carried forward up to 15 years.
  • Companies looking to take advantage of the R&D credit must employ less than 150 full-time employees in order to qualify for the refundable portion of the credit.
  • Taxable years beginning December 31, 2017, through December 31st, 2021, the R&D credit is equal to $6000,000 plus 15% of amounts exceeding $2.5 million.
  • Taxable years beginning December 31st, 2021 and after, the credit equals up to $500,000 plus 11% of any amount exceeding $2.5 million.

Federal R&D Tax Credit Program Highlights

  • Every year, more than $7.5 billion in federal R&D credits are given out to companies across the United States.
  • The Research and Development Tax Credit provides cash incentives through the form of credits for companies performing research activities in the United States.
  • The credit offsets costs spent performing research activities against federal tax liabilities.
  • Tax credits may be carried forward as far as 20 years.
  • The credit can be taken by a business on all open tax years, typically the last three or four years, plus the current year.
  • The credit creates a significant reduction to current and future federal tax liabilities.
  • All companies can potentially benefit from the tax credit if qualifying research activities are taking place.

The Research and Development Tax Credit

R&D is a dollar for dollar tax credit that can be claimed by companies in the United States to offset costs spent performing research and development to benefit their business. Created as an incentive by the United States Government for businesses to undergo research activities to develop or improve their products, processes, or software, The R&D credit was made permanent on a federal level by the Protecting Americans Against Tax Hikes Act of 2015, allowing business owners to ensure their research activities would earn them the lucrative credit. The PATH Act also broaden the variety of industries that are able to claim the credit.

How to Apply

Claiming your R&D tax credits is made simple by our team at National Tax Group. During your call, we’ll determine if your research activities qualify your company to take advantage of the R&D Tax Credit Program. We’ll provide the proper documentation and remain by your side until all documentation is submitted and approved by the Internal Revenue Service. In the highly unlikely event of an audit, we will supply all materials needed to clear it at no extra cost for you. Contact our tax experts to get started.