Arizona: Incentives

Angel Investment

NOTICE:

Please note that on June 16, 2015, the ACA certified an allotment of tax credits that caused the $20 million Angel tax credit “cap,” originally instituted in 2006, to become fully subscribed.  Accordingly, the ACA is presently unable to certify further investments for Angel tax credits.

Although further investments in qualified small businesses cannot be certified for Angel tax credits, individuals currently remain eligible for the favorable post-2013 income tax treatment associated with dispositions of interests in “qualified small businesses.”   More particularly, pursuant to A.R.S. § 43-1022(27), individuals are currently authorized, in computing “Arizona adjusted gross income” for a taxable year, to subtract any net capital gain included in “federal adjusted gross income” in such taxable year that is derived from an investment in a qualified small business certified by the ACA. 

To that latter end, the ACA will continue to certify eligible business seeking status or renewed status as a “qualified small businesses” for a period of up to one year.   Further, the ACA will continue to maintain on its Website a list of businesses currently certified as a “qualified small business.”

ANGEL INVESTMENT

The principal objective of the Angel Investment program is to expand early stage investments in targeted Arizona small businesses. The program accomplishes this goal by currently eliminating Arizona capital gains tax liabilities associated with the disposition of investments in small businesses certified by the Arizona Commerce Authority (ACA). To view the list of businesses that have been certified under this program please click here.

BASIC ELIGIBILITY REQUIREMENTS

A small business may be a “qualified small business” if it:

  1. Is a corporation, limited liability company, partnership or other business entity (Sole proprietors are ineligible)
  2. Maintains a portion of its operations in Arizona
  3. Has at least two principal non-administrative full-time equivalent employees who are Arizona residents
  4. Is not principally engage in activities precluded by ACA
  5. Does not engage in activities that involve human cloning or embryonic stem cell research
  6. Does not have assets exceeding $10 million (companies certified on or before 12/31/11 are limited to $2 million), exclusive of intellectual property and qualified investments
  7. Satisfies all other requirements

For more detailed information please see below or direct questions to the Program Manager.

Pursuant to A.R.S. §41-1504(C)(1), the ACA is authorized to begin assessing and collecting fees for processing applications and administering tax incentives. Download the Incentive Program Fee Policy effective July 1, 2012.

APPLICATION PROCESS

To apply electronically for "qualified small business" status, click here.

EMAIL UPDATES

If you like to be kept abreast of developments with the Angel Investment program, please click here to send an e-mail requesting such notification. Please be sure to identify Angel Investment as the program for which you would like notification.

LEGISLATIVE INFORMATION

The Angel Investment program is established under A.R.S. §41-1518.  The program was amended in 2011 pursuant to HB2001 – Arizona’s Competitiveness Package and extended in 20014 pursuant to House Bill 2272.