For Arizona taxpayers claiming the Credit for Increased Research Activities – Individuals (Form 308-I), the carryover rules for unused credit depend on when the credit was established. For taxable years beginning before January 1, 2022, any unused credit may be carried forward for up to fifteen consecutive taxable years. However, for taxable years beginning on or after December 31, 2021, the carryover period is reduced to ten consecutive taxable years. If a taxpayer receives a refund of 75% of the excess credit, no additional carryover amount is available for that year, as the excess is fully refunded. Any carryover amounts from prior years must be carried forward to the next taxable year, subject to the applicable statutory carryover period.
Carryover Rules Summary
- Pre-2022 Credits: Carryover period of 15 years.
- Post-2021 Credits: Carryover period of 10 years.
- Refund Impact: A 75% refund of excess credit eliminates any carryover for that year.
- Carryover Continuation: Unused carryovers from prior years continue to the next year within the statutory period.
Source:
Form 308
Individual Income Tax Information | Arizona Department of Revenue
Form 140 instructions
Disclaimer: Always verify details with the Arizona Department of Revenue’s official forms and instructions. Tax rules may change, and individual circumstances may require professional advice from a CPA or tax attorney.