Income or Premium Tax Credits
Enterprise Zone (EZ) Program
Income or Premium Tax Credits |
Who |
For profit non-retail businesses and insurers located in an EZ. |
What |
Tax credit equal to a dollar for dollar reduction on income or premium taxes. |
When |
The earlier of either six months after the tax year end or before filing with Revenue, whichever comes first. |
Where |
Click here to see if your business address is in a zone. |
Why |
Up to $3,000 in tax credits over 3 years for each net new quality job created. |
Benefit Explanation
Businesses located in an Enterprise Zone that conduct 10% or less retail sales and create net new quality jobs can qualify for the income or premium tax credits. Three types of retail sales are unlimited and may constitute any percentage of the business activity without causing ineligibility:
a) Food and beverage for consumption on the premises solely by employees and occasional
guests of employees at the location
b) Promotional products displaying the company logo or trademark
c) Products sold to company employees
Tax credits may total up to $3,000 for each net new quality job over three years for a maximum of 200 employees in any given tax year. A net new quality job is a position that is:
1) full-time and permanent,
2) filled at least 90 days during the tax year, and
3) paid at least the average wage offer by county.
Further, the business must offer to pay at least 50% of the health insurance costs of the employee and the employee cannot have worked for the business in the previous 12 months. In addition, if a business claims a healthy forest or military reuse zone credit it may not claim an EZ tax credit with respect to the same employee(s). The EZ program encourages continuous employment, therefore, the tax credit is equal to:
Year of Employment |
Tax Credit Amount |
First year: |
1/4 of the wages paid to an employee up to $500 |
Second year: |
1/3 of the wages paid to an employee up to $1,000 |
Third year: |
1/2 of the wages paid to an employee up to $1,500 | If the allowable enterprise zone credit exceeds the income or premium tax liability, any unused amount may be carried forward for up to five taxable years, providing the business remains in the enterprise zone. 35% of the net new employees on whom the business is claiming a credit must live within an enterprise zone in the same county as the business on the date of hire.
Tax Credit Reporting Form and Guidelines
The most recent reporting form can be found below.
Tax Credit Reporting Deadline: For tax years beginning January 1, 2002 and thereafter, the law requires EZ Tax Credit Reports be reported to the Arizona Department of Commerce by the earlier of either six months after the end of the tax year in which the credits were earned and claimed or before the date the tax return is filed for the tax year in which the credits were earned and claimed. Failure to timely report and certify to Commerce disqualifies the taxpayer from claiming credits as well as carry forward from prior years.
Department of Revenue Helpful Resources
• Corporate Tax Ruling CTR 02-5
• Partnership Tax Ruling PTR 02-1
• Revenue Form 304 & Instructions
• Revenue Form 304-1 & Instructions
• Revenue Form 304-2 & Instructions
Department of Insurance Helpful Resources
• Forms
• Home page and contact info If you any questions, please contact the Program Manager.
View: Property Tax Reduction Page
Return to: EZ Home Page
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