LOW BUSINESS COSTS
Arizona's focus on business is simple: keep regulation light and taxes low. Arizona’s corporate and individual income tax rates are among the lowest in the nation, making the state welcoming to both business and people.
Low Income
Flat Tax
Lowest Individual Income Flat Tax
At 2.5%, Arizona offers the lowest flat-tax in the nation. Of the 12 states with flat income taxes, none have rates lower than 3% except for Arizona.
Low Corporate
Income Tax
Seventh Lowest Corporate Income Tax
At 4.9%, Arizona’s corporate income tax rate is among the lowest in the nation on a 100% sales factor apportionment formula.
Reduced Capital Gains
Reduced Capital Gains Tax
Arizona offers a reduced long-term capital gains tax that decreases taxes on assets acquired after 2011 up to 25%.
Reduced Property Tax
Reduced Property Assessment Ratio
In 2022, legislation reduced the Class 1 property assessment ratio to 15% by 2027, continuing a 10-year trend of reducing property taxes and resulting in a 25% decrease in Class 1 property taxes since 2012.
Reduced Depreciation
Personal Property Tax Reduction
Arizona has nearly eliminated personal property tax by reducing the taxable value of most personal property to 2.5% of purchase cost, resulting in an effective tax rate below 0.02%.
Zone Tax
Benefits
Foreign Trade Zones
Arizona businesses in federally approved zones or sub-zones can access a reduced property tax assessment ratio of 5%, significantly lowering real and personal property taxes by nearly 70%.
2.5%
Flat Income Tax
Lowest flat-tax in the U.S.
4.9%
Corporate Income Tax
Among the Lowest in the U.S.
NO
Franchise Tax, Business Inventory Tax, Estate Tax, Worldwide Unitary Tax, Gross Receipts Tax
QUALIFIED FACILITY TAX CREDITS
The Qualified Facility Tax Credit Program provides a refundable income tax credit for eligible capital investments and job creation in manufacturing, R&D, headquarters or suppliers of large-scale manufacturers. The program encourages business investment that produces high-quality employment opportunities for the citizens of Arizona and enhance Arizona’s position as a center for corporate headquarters, commercial research, and manufacturing.
QUALITY JOBS & ANGEL INVESTMENT TAX CREDIT
The Arizona Quality Jobs Tax Credit program incentivizes businesses to create high-quality jobs by offering a $9,000 tax credit per qualifying job, distributed over three years. To qualify, businesses must meet job creation thresholds, offer wages above the county median wage and provide health insurance.
The Angel Investment Program provides tax credits to investors who fund early-stage Arizona startups, encouraging local investment and supporting business growth in technology and other innovative industries.
R&D TAX CREDIT
The Arizona Research and Development (R&D) Tax Credit program encourages businesses to invest in innovation by offering a tax credit for qualified research expenses. Companies can receive a 24% credit on the first $2.5 million of qualifying R&D expenditures and 15% for amounts above that. An additional 10% credit is available for qualifying research payments made to Arizona State University, Northern Arizona University or the University of Arizona. This program helps businesses offset R&D costs and stay competitive through innovation.
ARIZONA'S TAX ADVANTAGES
Businesses can benefit from sales tax exemptions on machinery and equipment used in manufacturing or R&D, clean rooms used in semiconductor manufacturing and R&D, qualifying computer data center equipment and the electricity or natural gas for manufacturing or smelting operations.
Arizona's Additional Depreciation values all qualifying business personal property classified in or after 2022 at 2.5% immediately and indefinitely, regardless of equipment type or use, creating low, uniform, and consistent taxable values.
Programs to Enhance Your Success
Arizona provides world-class advantages—including a pro-business environment top talent, a strong supply chain and modern transportation infrastructure. The states targeted financial programs are an added benefit.