Renewable Energy Tax Incentive Program The Renewable Energy Tax Incentives Program (A.R.S. §41-1511) was established by the Arizona legislature in 2009 to promote the renewable energy industry in the state. The goal of the new program is to encourage business investment that will produce high quality employment opportunities and enhance Arizona’s position as a center for production and use of renewable energy products. The program accomplishes this goal by providing tax incentives to companies in the solar, wind, geothermal and other renewable energy industries who are expanding or locating in Arizona. The program offers two benefits; up to a 10% refundable income tax credit and up to a 75% reduction on real and personal property taxes.
For more detailed information please see below or direct questions to the Program Manager.
Basic Eligibility Requirements
A company may be eligible for tax incentives, if it: - Is primarily (more than 50%) engaged in the manufacturing of or headquarters for producing systems and components that are used or useful in manufacturing renewable energy equipment
- Is expanding or locating either a renewable energy manufacturing or headquarters facility in Arizona
- Creates fulltime employment positions of which at least 51% are paid at least 125% of the state’s annual median wage (currently $30,940)
- Offers to pay at least 80% of the health insurance costs for all net new fulltime employment positions
- Spends at least $250,000 in qualifying investments during each twelve-month period
Incentive Overview
Income Tax Credits: Commerce may authorize up to $70 million per calendar year in tax credits to qualified companies beginning January 2010 through December 2014. The tax credits will be authorized on a first come, first served basis, which is established by the date and time the company files an application with Commerce. Download the Tax Credit Allocation Table to view the amount of tax credits available this year.
Businesses making new qualifying investments in manufacturing and/or headquarter operations in Arizona in renewable energy industries are eligible for a tax credit if they meet the following requirements: - At least 51% of the net new fulltime employment positions are paid 125% or more of the state’s annual median wage; and
- The company offers to pay at least 80% of the employee’s health insurance costs for all net new fulltime employment positions at the facility.
The tax credit amount is based on the total qualifying investment made and the number of jobs being created by the company. To generate tax credits a renewable energy manufacturing companies must create 1.5 new fulltime jobs for every $500,000 of capital investment. Alternatively a renewable energy headquarters operation must create 1 new fulltime job for every $200,000 of capital investment.
Property Tax Reduction: Businesses making new qualifying investment of $25 million or more in manufacturing and/or headquarter operations in Arizona in renewable energy industries are eligible for: - 10 years of property tax savings, if the company pays at least 51% of the net new fulltime employment positions between 125% and 199% of the annual median wage.
- 15 years of property tax savings, if the company pays at least 51% of the net new fulltime employment positions 200% or more of the annual median wage.
Both the real and personal property can be reclassified to Class 6 property for both primary and secondary property tax purposes.
Application Process
To become a qualified company and receive pre-approval for tax incentives, eligible applicants must follow the process below: - Note: Prior to submittal of an application to Commerce, a company may request a letter of good standing from Revenue by submitting form Tax Clearance Application to Revenue. Further, a company must also request a letter of good standing from the County Assessor of the county in which the project is located.
- Apply for program incentives by completing a 2010 Initial Application and submit it to Commerce.
- Upon receipt of an initial application Commerce will assign a priority placement number for receipt of tax incentives.
- Within 30 days of receipt of a complete application, Commerce will notify the company of pre-approval or denial. If a company is pre-approved, Commerce will issue a Letter of Qualification to the company and transmit a copy to the Arizona Department of Revenue and the County Assessor.
Note: Pre-approval does not guarantee receipt of tax incentives under this program because pre-approval is issued before Commerce determines final eligibility. The final determination of eligibility will be made after a company applies for post-approval.
Following Pre-Approval
Within 12-months of the pre-approval date a company must demonstrate it has spent at least $250,000 in qualified expenses.
- Complete the 12-month Interim Report (coming soon) and attach documentation of qualified expenditures.
After the Facility is Operational - Once the facility begins operations the company must submit a Completion Report (coming soon) to Commerce.
- Commerce may issue post-approval to the company after reviewing the Completion Report and verifying the company’s eligibility.
- Once post-approval is received a qualified company may claim the tax credits and begin receiving property tax reductions.
Supplemental Application Materials (coming soon) - Voluntary Relinquishment of Tax Credits
- Expense Report
- Calculation of FTEs
Email Updates
Commerce will soon begin the process of drafting permanent rules for the Renewable Energy Tax Incentive Program and will seek public comment. If you would like to be notified as this process takes place, please placed you email address on our list, please click here to send an email requesting notification. Please be sure to identify the renewable energy program as the program for which you would like notification.
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