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Outstanding Arizona Tax Credit Types and Programs for Employers

by | Mar 26, 2022 | Blog, Qualified Charitable Organization, Tax Credits

Are you wondering how does an employer gets started on Arizona tax credit? Or are you in the working class looking for opportunities to lower your taxes or receive incentives grants? The state offers Arizona tax credit and programs that a company or employer can look into.


Arizona Tax Credit


Quality Jobs Tax Credit

Suppose taxpayers are interested in applying for the quality jobs tax credit. In that case, they must submit a pre-approval application to the Arizona Commerce Authority (ACA) to acquire a quality jobs tax credit. Suppose the Commerce Authority approves the application and all eligibility requirements are met. In that case, the taxpayer will receive an Arizona tax credit allocation letter stating the approval information and how to claim the credit from the Arizona Department of Insurance or Department of Revenue.

This Arizona tax credit has a maximum of $9,000, spreading over a three-year plan at $3,000 yearly. The cap is at 10,000 work opportunities of all participants per year.


Work Opportunity Tax Credit

The work opportunity tax credit or commonly coined as WOTC, offers employers a chance to acquire a federal tax credit from $1,200 to $9,000 for each employee. This Arizona tax credit is applicable when the new employee is classified as a specific target group member and whose work hours are 120 hours at a minimum for their first year of employment.


Non-Refundable Research and Development Tax Credit

The non-refundable research and development (R&D) tax credit was enacted for corporations in 1992 and for individual use in 1999 under the governance of the Arizona Department of Revenue. From 2011 to 2022, the non-refundable R&D tax credit has about 24% of the initial $2.5 million of approved costs, plus about 15% of any of the approved costs exceeding $2.5 million.


Refundable Research and Development Tax Credit

A refundable R&D tax credit is managed by the Arizona Commerce Authority. A company or employer may be qualified to claim a refund partially from its excess credit. A company that has less than 150 employees who have full-time employment may apply a partial refund to about 75% maximum of its extra credit cost. Employers should note, however, that the ACA processes refund requests on a first-come, first-served basis.


Customized Training Program

This program is specially designed for an employer or group of companies in the service or production industry that is improving new jobs through leveling up workplace literacy through training programs. Suppose an employer joins this program, the company must employ or continue the employment of the individual who completed the training program.


Arizona Tax Credit Types and Programs for Employers to Look Into


Incumbent Worker Training Program

This specific training program aims to assist the current workforce in acquiring valuable skills to enhance work performance and lower working problems, particularly avoiding layoffs. The training program is managed by the LWDB (local workforce development board) in coordination with the employer or company to help workers.


Registered Apprenticeship Program

The registered apprenticeship program is a chance for a worker to receive payment (salary) while doing an RTI (related technical instruction) or an OJT (on-the-job) training. Individual employers, a company, or labor groups can sponsor apprenticeship programs, where the specific sponsor will manage the entire program – from planning to budget to implementation.

An apprentice must be a full-time employee under the company or employer sponsoring the training program. However, there is also what we call a school-to-registered apprenticeship program, where a participating apprentice may have part-time employment.

An apprentice may have about 40 to 50% of a skilled worker’s salary wage for starters. The pay may increase depending on the performance of the apprentice and the RTI evaluation result.


Takeaway Thought

There are various Arizona tax credit types and programs that an employer or employee can explore to acquire the benefits that the state offers. Tax credit opportunities include quality jobs, work opportunities, research and development (R&D) tax credits. In addition, a starting employee may look into learning opportunities, such as the customized training program, apprenticeship program, and incumbent worker training program.

Otherwise, Arizona also offers other tax credit opportunities. One of the most famous is the charitable tax credit program, where taxpayers donate to a qualified charitable organization. A receipt will be given as proof of donation and serve as a legal document that a taxpayer can use when filing taxes. If you are interested in such opportunities, you may consider donating your tax liabilities to Children’s Care Arizona.

Children’s Care Arizona is a reliable, qualified charitable organization in Phoenix, AZ. We aim to help low-income families with their child care, schooling, and after-care needs. Our volunteers have been diligently working, helping kids with the extra-curricular activities and supervision. For more information on this amazing AZ tax credit opportunity, call us at (480) 795 3775 or email us at support@childrenscareaz.org.

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