R&D REFUNDABLE TAX CREDIT INCENTIVE OVERVIEW

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The ACA has been given the authority to approve refunds under this program up to $5 million in any calendar year, the maximum refund amount per taxpayer is $100,000 in a single tax year.

The calendar year 2025 cap has been fully allocated. The calendar year 2026 cap applications may be filed on or after the first business day of 2026 via the ACA's Electronic Application System (please note the application will not be available until 8:00 a.m. on the first business day of 2026).

 

Application process

Taxpayer must submit all applications through the ACA's Electronic Application System.

The ACA will accept applications commencing on the first business day of the calendar year. Applications are processed on a first come, first serve basis, according to the date of the application.

Because of the volume of applications historically received on the first business day of the calendar year and the level of the program cap, substantially complete applications received on the first business day of a calendar year will be prioritized by means of a random selection process that includes all substantially complete applications received by 11:59 p.m. (Arizona time) on that date. Thereafter, for the remainder of the calendar year, substantially complete applications will be prioritized based on the time received.

Applications must be based on actual numbers, not estimates. A calendar year taxpayer may file an application on or after the first business day following the close of the previous calendar year. A fiscal year taxpayer may file an application on or after the first business day after the end of the fiscal year. For example, a taxpayer with a June 30, 2025 fiscal year end could apply for a partial refund of R&D credits as early as July 1, 2025, if cap is still available. If, however, the 2025 cap has been exhausted, the fiscal year end taxpayer may submit an application on or after the first business day of 2026, provided said taxpayer has NOT filed its tax return with Revenue for the tax year in which the R&D credit was generated.

 

BASIC ELIGIBILITY REQUIREMENTS

A company may be eligible for a partial refund of its R&D tax credit, if it:

  • Meets the eligibility requirements of A.R.S. §§ 41-1507 and 43-1074.01 or 43-1168 and the company’s current year’s Arizona R&D tax credit exceeds its current year’s tax liability.
  • Submits an application to the ACA and receives a Certification of Qualification prior to filing a tax return with Revenue.
  • Employs less than 150 full-time employees world-wide as of the last day of the taxpayer's taxable year.
  • Remits a non-refundable processing fee equal to 1% of the company’s tax credit being refunded.
  • Does not exceed the tax year refund limitations under A.R.S. § 41-1507 (E)
  • Complies with employer and business sanctions set forth in A.R.S. § 23-214 (B) and A.R.S. § 35-393.

 

GENERAL INFORMATION

Questions regarding the refundable tax credit, can be directed to the ACA Program Manager.