The Arizona Qualified Facility Tax Credit Program | How to apply.
Expanding your Business to or in Arizona?
Read how the Arizona Qualified Facility Tax Credit Program can help you make that possible!
For those looking to establish or expand their operations in Arizona, the Arizona Qualified Facility Tax Credit Program, a refundable credit might be an excellent fit for your organization. This program, designed to spur economic growth and foster job creation, offers a range of benefits that can generate cash funding and tax credits based on future payroll additions and capital investment. Businesses looking to expand existing operations or relocate to Arizona.
What is the Arizona Qualified Facility Program?
The Arizona Qualified Facility Tax Credit Program is a state-level economic development tool to attract businesses in targeted industries. Established by the Arizona Commerce Authority (ACA), this program offers various incentives and benefits to eligible companies that make substantial investments in qualified facilities within the state.
Key Item of Importance: A refundable credit is very exciting! Why, because it is a cash payment from the state versus a typical tax credit. As an example, if the company receives a $2M benefit, and owes $100,000 in state income taxes, the $100,000 is reduced to zero, as a dollar-for-dollar credit, and the remaining $900,000 would be issued in the form of a check from the state!
Potential Benefit
The Qualified Facility Tax Credit offers a refundable income tax credit equal to the lesser of:
10% of the qualifying capital investment.
$20,000 per net new full-time job at the facility
$30,000 per net new full-time job if the qualifying investment for larger expansions.
$30 million per taxpayer, per year, so in essence the maximum a single applicant can receive is $30 million.
Key Item of Importance: our firm employs a strategy called layering that allows a company to receive more than $30M, which we will discuss with you.
Here is an example of how the benefit is calculated.
35 new jobs created X $20,000.00 = $700,000.00 benefit for the client OR 10% of your capex, the lesser of the two.
While the benefits of the Arizona Qualified Facility Program are enticing, eligibility criteria must be met to qualify for participation. Here are the general requirements for businesses seeking to participate in the program:
Investment Threshold: Companies must make at least $250,000 investment at their facility, which can include tenant improvements, purchase of equipment and machinery, lease payments, building purchases, certain software, and other depreciable investments.
Job Creation: Participating businesses are typically required to create a specified number of quality jobs within a certain timeframe. These jobs must meet predetermined wage and benefit criteria to qualify, which depends on where your facility is located in Arizona.
Industry Focus: The Arizona Qualified Facility Program targets specific industries that benefit the state's economic development strategy. These industries may include manufacturing, biotechnology, renewable energy, aerospace, and more. It is also available to companies headquartered in Arizona, which is a relatively new criterion. So if you manufacture in Arizona or are headquartered, we need to talk about your eligibility.
Projected Sales Revenues: At least 65% of the project’s sales/revenues must be derived from outside the state.
Were Here to Help
For businesses considering Arizona as their next investment destination or looking to expand existing operations, exploring the benefits of the Arizona Qualified Facility Program and understanding the qualification process is crucial. Our firm, EIAG has operated in Arizona for over two decades and we have helped a large portion of the companies apply for this program and make sure they are realizing the entire financial benefit available. To discuss your organization's eligibility for this refundable tax credit or other incentives, please contact an EIAG professional today.