About this programme
The Qualified Facility Tax Credit is an Arizona state income tax credit, created under A.R.S. § 41-1512 and administered by the Arizona Commerce Authority (ACA), aimed at companies establishing or expanding a headquarters facility or a manufacturing facility (including manufacturing-related research and development) in Arizona.
The credit is refundable, meaning a company can receive the value of the credit even if it exceeds the company's Arizona tax liability for the year. It is designed to reward capital investment paired with net new, higher-wage, full-time jobs rather than investment alone.
The ACA may authorize up to $125 million in these credits per calendar year, on a first-come, first-served basis by priority placement number, through December 2030. Because the annual pool is capped and allocated in order of application, timing of the Pre-Approval application affects whether credits are still available in a given year.
How it works
The credit amount is the LESSER of three caps: (1) 10% of the qualifying capital investment; (2) $20,000 per net new job at the facility if total qualifying investment is under $2,000,000,000, or $30,000 per net new full-time position if total qualifying investment is $2,000,000,000 or more; or (3) $30,000,000 per taxpayer per year.
The credit is claimed over time, not in one lump sum: once Post-Approval is issued, the company claims the credit in five equal annual installments on its original Arizona tax return, filed together with Arizona Department of Revenue Form 349.
The process runs in two approval stages. Pre-Approval reserves a priority placement number and confirms the applicant meets the program's threshold criteria on paper. Post-Approval, granted only after the facility is operational and an independent managed review is completed, is the stage where final eligibility and the actual credit amount are determined — Pre-Approval does not guarantee that credits will ultimately be received.
If a company has not reached Post-Approval within 12 months of its Pre-Approval date, it must file an Interim Report to the ACA demonstrating additional qualifying expenditures, as defined in the program guidelines, to keep its Pre-Approval active.
Who can apply
A company must make a capital investment of at least $250,000 to establish or expand a Qualified Facility, where at least 80% of the facility's property and payroll is devoted to qualified manufacturing, manufacturing-related research and development, or headquarters functions.
The project must create net new full-time employment positions, with at least 51% of those positions paid at least 125% of the state's annual median production wage if the facility is in an urban area, or at least 100% of that wage if in a rural area.
At least 65% of the project's sales or revenues must come from outside Arizona.
The company must offer to pay at least 65% of health insurance premiums for all net new full-time positions created by the project.
How to apply
- Before applying to the ACA, request a letter of good standing from the Arizona Department of Revenue by submitting a Tax Clearance Application to Revenue.
- Apply for Pre-Approval by completing a Request for Pre-Approval and submitting it electronically to the ACA through the Apply Now portal.
- The ACA assigns a priority placement number to the application upon receipt, which determines the company's place in the annual $125 million allocation queue.
- Within 30 days of receiving a complete Request for Pre-Approval, the ACA notifies the company of Pre-Approval or denial; if approved, the ACA transmits a copy of the Pre-Approval to the Department of Revenue.
- If Post-Approval is not reached within 12 months of Pre-Approval, submit an Interim Report to the ACA with documentation of additional qualifying expenditures.
- Once the facility is operational, enter into a written managed review agreement with the ACA and engage, at the company's expense, an Arizona-licensed certified public accountant approved by the ACA to conduct the managed review.
- After the CPA submits its findings in writing to the ACA, submit an Application for Post-Approval electronically to the ACA.
- The ACA reviews the application, verifies eligibility, and may issue Post-Approval; once received, claim the credit in five equal annual installments on the company's original Arizona tax return, filed with Revenue Form 349.
Documents you’ll typically need
- Tax Clearance Application (to obtain the letter of good standing from the Arizona Department of Revenue)
- Request for Pre-Approval (filed electronically with the ACA)
- Interim Report and documentation of additional qualifying expenditures (only if Post-Approval is not reached within 12 months of Pre-Approval)
- Written managed review agreement with the ACA
- Managed review findings from an Arizona-licensed, ACA-approved certified public accountant
- Application for Post-Approval (filed electronically with the ACA)
- Arizona Department of Revenue Form 349, filed with the company's original Arizona tax return for each of the five annual credit installments
Frequently asked
Is the Qualified Facility Tax Credit a grant or a tax credit?
It is a refundable Arizona state income tax credit, not a cash grant. A company claims it against its Arizona tax liability in five equal annual installments after Post-Approval, and because it is refundable, the company can receive the credit's value even if it exceeds what the company owes in Arizona tax that year.
Does Pre-Approval guarantee we will receive the tax credits?
No. The Arizona Commerce Authority states explicitly that Pre-Approval does not guarantee receipt of tax credits, because it is issued before the ACA determines final eligibility. Final eligibility is determined only at the Post-Approval stage, after the facility is operational and has completed a managed review.
How is the credit amount calculated?
The credit equals the lesser of three limits: 10% of the qualifying capital investment; $20,000 per net new job (or $30,000 per job if total qualifying investment exceeds $2 billion); or $30,000,000 per taxpayer per year. Whichever of the three produces the smallest figure is the credit amount.
Is there a limit on how many companies can get this credit each year?
Yes. The ACA may authorize up to $125 million in Qualified Facility tax credits per calendar year across all applicants, through December 2030. Credits are allocated first-come, first-served by the priority placement number assigned at Pre-Approval, so the program can be fully allocated for a given year before it ends.
What counts as a Qualified Facility?
A facility qualifies if at least 80% of its property and payroll is devoted to qualified manufacturing, manufacturing-related research and development, or headquarters functions, and the project meets the program's minimum $250,000 capital investment, net new job, out-of-state revenue, and health insurance thresholds.
Who do we contact with questions about this program?
The Arizona Commerce Authority directs questions to the Qualified Facility Tax Credit Program Manager at Finance@azcommerce.com, the same address used to join the program's stakeholder update list.
Reviewed 2026-08-16. Programmes change — confirm current eligibility, amounts and deadlines on the official page before you apply. CapEasy is a private consultancy and is not affiliated with any government authority.