325: Credit for Agricultural Pollution Control Equipment (2025)

Who files this form

Form 325 is used to calculate and report the Agricultural Pollution Control Equipment Credit, including credits passed through from partnerships and available carryovers.

• Individuals claiming the credit include Form 325 with their return.
• Partnerships qualifying for the credit must pass it through to their individual partners and complete Form 325-P for each individual partner.
• This credit is no longer available to corporate taxpayers.

What you'll need

Have the following information and forms ready, as applicable:

• Your name as shown on Form 140, 140PY, 140NR, 140X or 165, and your Social Security number or Employer Identification Number.
• Each qualifying property's description, date placed in service or expected service date, and total cost incurred during the taxable year.
• A separate equipment schedule if you need more space.
• Form 325-P for credit passed through from a partnership.
• Carryover details from the past five taxable years: the taxable year, original credit amount, and amount previously used or expired.
• Form 301, or Form 301-SBI if you made the Small Business Income election, to report the credit amounts.

How to file

Include Form 325 with your tax return. The form does not provide a mailing address or e-filing instructions.

If you are a qualifying partnership passing the credit through to individual partners:

• Complete Form 325-P for each individual partner.
• Give each individual partner a copy.
• Include a copy of each completed Form 325-P with your tax return.
• Keep a copy of each completed Form 325-P for your records.

Individuals must also report the current-year credit, available carryover and total available credit on Form 301, Part 1, line 9, columns (a), (b) and (c). If you made the Small Business Income election, use Form 301-SBI, Part 1, line 5, columns (a), (b) and (c) instead.

Common mistakes

• Claiming the credit as a corporate taxpayer. The form states that this credit is no longer available to corporate taxpayers.
• Forgetting the basis adjustment. If you elect to claim this credit, reduce the equipment's basis by the amount of credit claimed when calculating Arizona depreciation or amortization.
• Missing partnership copies. Partnerships must provide Form 325-P to each individual partner, include copies with their tax return and keep copies for their records.
• Skipping applicable carryovers. Complete Part 5 if you claimed this credit and have a carryover from the past five taxable years. Otherwise, go to Part 6.
• Leaving out extra equipment details. Include a separate schedule if you need additional space.

Questions people ask

How is the current-year credit calculated?

Multiply the total cost of qualifying pollution control equipment incurred during the taxable year by 25%. Add any credit passed through from partnerships. The current-year credit is the lesser of that total or $25,000.

Can I report a credit carryover?

Yes. Part 5 provides space for available carryovers from the past five taxable years. For each year, subtract the amount previously used or expired from the original credit amount.

What if my credit comes from a partnership?

Enter the total credit passed through from partnerships from Form 325-P, Part 2, line 4, on Form 325, line 15.

Does claiming the credit affect depreciation or amortization?

Yes. To calculate Arizona depreciation or amortization, reduce the agricultural pollution control equipment's basis by the amount of credit claimed.

What changes if I made the Small Business Income election?

Report the amounts from Form 325, lines 25, 26 and 27, on Form 301-SBI, Part 1, line 5, columns (a), (b) and (c), instead of Form 301.

Official sources

• https://azdor.gov/forms