SB1562 is a bill that proposes several changes to the existing Research and Development Credit (R&D Credit) system in Arizona. The bill aims to increase the aggregate annual cap on the refundable portion of the R&D Credit from $5,000,000 to $10,000,000. Additionally, it introduces a new provision that allows the Arizona Commerce Authority (ACA) to approve the reinvestment of a portion of a taxpayer's unused balance of nonrefundable R&D Credits for specific projects within Arizona, such as sustainability or water capital projects, capital expenditure projects with higher learning institutions or career technical education districts, and workforce development projects including tuition reimbursement, hiring for institutions, and apprenticeships.

The bill also sets a cap of $50,000,000 per fiscal year on the total amount of tax credit reinvestments the ACA may approve and limits an applicant's credit reinvestment to the lesser of $10,000,000 per year or the applicant's current balance of unused credits. It requires the ACA to conduct an economic analysis of the reinvestment program in 2028 and 2031 and report the findings to the Governor and legislative leaders. The bill appropriates $50,075,000 from the state General Fund for FY 2024 to the ACA for implementing and administering the reinvestment of unused credits. The bill includes technical changes such as updating the spelling of "e-mail" to "email" and "per cent" to "percent," and it is set to become effective on the general effective date, with some provisions retroactive to July 1, 2023.

Statutes affected:
Introduced Version: 41-1507, 41-1507.02
Senate Engrossed Version: 41-1507, 41-1507.02