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Arizona Extends, Expands the Quality Jobs Program

Arizona recently enacted S.B. 1416,1 which extends the Quality Jobs Program through June 30, 2025. The new legislation also modifies the eligibility criteria for the program. Effective January 1, 2018, a business must meet one of the below requirements in order to claim a quality jobs credit.

If the business is in an urban location:

arizona urban tax credit table

If the business is in a rural location:

arizona rural tax credit table

Prior to 2018, a business in an urban location must make an investment of at least $5,000,000 and create at least 25 new jobs, regardless of the level of pay. A business in any other location in the state would have to make an investment of at least $1,000,000 and create 5 new jobs.

An urban location is defined as a location within the exterior boundaries of a city or town that has a population of 50,000 or more, and is located in a county that has a population of 800,000 or more. A rural location would be a location that is in a city or town with a population of less than 50,000, or in a county that has a population of less than 800,000.

The income tax credit available under the Quality Jobs Program continues to be $3,000 per full-time employee hired in a qualified position. The credit is available annually for the first three years of the eligible employee’s employment. A qualified position must meet the following criteria:

  • The employer must pay compensation at least equal to the county median wage for the county in which the business is located
  • The employer must provide health insurance for to the employee, at least 65 percent of the cost of which must be paid by the employer.
  • The new position must be a full-time position consisting of at least 1,750 hours per year.

The business must obtain pre-approval from the Arizona Commerce Authority in order to be eligible for the Quality Jobs Program. Additionally, the business must certify to the Arizona Department of Revenue, on or before the due date of the return, information regarding each employee who is employed at the eligible location.

The new eligibility requirements will help create opportunities for businesses that have previously been unable to qualify for the credit due to the capital investment requirement. Additionally, a business that is planning an expansion late in 2017 may have the opportunity to defer its expansion until early 2018 in order to take advantage of the new eligibility criteria.

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1 Arizona S.B. 1416 amends Chapter 10, Article 2, Section 41-1525 of the Arizona Revised Statutes.

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