Qualified Environmental Technology Facilities Credit

Summary

The Arizona Department of Commerce is charged to "conduct an environmental technology assistance program to promote business and economic development by recruiting and expanding companies that manufacture, produce or process solar and other renewable energy products or products from recycled materials. "The primary financial incentive stemming from this program is a 10% credit toward the corporate and personal income taxes for the cost of construction of a "qualified environmental technology facility" for the manufacture of solar and other renewable energy products or recycled materials. The amount of the credit may not exceed 75% of the taxpayer’s tax liability, and in the case that the amount of the claim exceeds 75% of the tax liability, the unused credit may be carried forward for up to fifteen years. This extended carryover provision is significant as it allows companies with smaller tax liabilities--perhaps reduced by other credits or deductions--to take full advantage of Arizona’s 10% credit. The statute also makes provisions for additions to an existing facility: "A taxpayer may claim a credit under this section with respect to new qualifying construction within ten years after the start of the facility's initial construction, but a credit is not allowed under this section for any amount spent more than ten years after the start of the facility's initial construction." With this ten year maximum facility age, the emphasis remains on newer facilities.