308: Credit for Increased Research Activities – Corporations (2025)

Who files this form

Use Form 308 to claim the Arizona Credit for Increased Research Activities for tax year 2025 if you have qualified research expenses, receive this credit from a partnership, or have credit carryovers.

If you have neither qualified research expenses nor a credit passed through from a partnership, complete the form only if you have credit carryovers. Otherwise, the form says you are not eligible to claim the credit.

Partnerships qualifying for the credit must pass it through to their partners. S corporations may keep the credit to apply against their own tax liability or elect to pass it through to shareholders.

What you'll need

• Your tax return, with the name and employer identification number used on that return.
• Research expense information for the calculation you choose, including qualified-service wages, supplies, computer rental or lease costs, contract research expenses, and basic research payments.
• For the regular credit, your average annual Arizona gross receipts, fixed-base percentage, and applicable base-period amounts.
• For the Alternative Simplified Credit, qualified research expense totals for the prior three years and the qualified organization base-period amount.
• A copy of your Arizona Commerce Authority (ACA) certification if you answer “Yes” to Part 1, line 2, asking whether the credit is refundable.
• Copies of Forms 308-P for credits received from partnerships.
• If claiming carryovers, the original credit amounts and amounts previously used or expired, by taxable year.
• Your applicable tax return and Form 300 amounts when completing the refundable or nonrefundable credit sections.

How to file

Include Form 308 with your tax return. The supplied form does not list a mailing address or e-filing instructions.

• Complete Part 1 to determine which parts apply to you.
• For the regular credit, complete Part 2, lines 8 through 27a. For the Alternative Simplified Credit, check the ASC box and complete Part 12, then transfer line 93 to Part 2, line 27b.
• Report credits received from partnerships in Part 3 and include copies of the Forms 308-P with your return.
• Complete the applicable refund, carryover, and nonrefundable credit sections, and transfer the amounts to your tax return and Form 300 as directed.

Partnerships must complete Form 308-P for each partner, provide each partner a copy, include copies with the tax return, and keep copies for their records.

S corporations passing the credit through must complete Form 308-S for each individual shareholder, provide copies to shareholders, and include copies with the tax return.

Common mistakes

• Including excluded wages: Do not include wages used to figure the federal work opportunity credit in the qualified-service wages on line 11 or line 78.
• Choosing ASC without the required expense history: If you have no qualified research expenses in any one of the prior three years, the form says you do not qualify for the Alternative Simplified Credit.
• Carrying forward credit from a refund year: If you elect a refund of 75% of the excess credit, you cannot carry forward any amount from that year.
• Completing Part 10 when it does not apply: Do not complete Part 10 if you completed Part 7 and are receiving a refund, or if you have no credit carryovers.
• Checking both S corporation election boxes: Part 6 says to check only one box. The election is irrevocable for the taxable year.
• Omitting required attachments: Include the ACA certification when required and copies of applicable pass-through credit forms.

Questions people ask

Can I use Form 308 if I had no qualified research expenses this year?

Yes, if you are claiming a credit passed through from a partnership or have credit carryovers. If neither applies, the form says you are not eligible to claim the credit.

How do I choose the Alternative Simplified Credit?

Check the ASC box on page 1 and complete Part 12, lines 75 through 93. Enter line 93 on Part 2, line 27b. You do not qualify for ASC if you have no qualified research expenses in any one of the prior three years.

How is the refundable amount calculated?

Part 7 calculates 75% of the current year's excess credit, then limits the refund to the maximum refundable credit from the ACA and any applicable partnership pass-through amounts. The refundable credit is the lesser of those two amounts.

Can an S corporation keep the credit?

Yes. It may keep the credit to apply against tax liability at the S corporation level or elect to pass it through to shareholders. Part 6 requires one choice, and the election is irrevocable for that taxable year.

Official sources

• https://azdor.gov/forms