AZ · Tax Credit

Arizona Workforce Training Tax Credits: What Employers Can Claim

Arizona has no broad hiring or training tax credit for employers in 2026. The Quality Jobs credit ($3,000 a year per new job for 3 years, up to $9,000) was repealed in the FY 2027 budget law, effective for tax years starting after 2025. The federal Work Opportunity Tax Credit lapsed for people who start work after December 31, 2025. Two small state credits remain: one for hiring TANF recipients (corporations only, almost never claimed) and $1,000 per employee placed on National Guard active duty.

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State pre-filled: AZ
Program type pre-filled: tax_credit

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HOW IT WORKS

Four steps, in this order.

1
Do not plan around WOTC or Quality Jobs for 2026 hires
2
Check the National Guard and TANF credits if they apply
3
Claim on your Arizona return and carry forward unused amounts
4
Have your tax adviser confirm before filing

4 VERIFIED PROGRAMS

Where the Arizona money comes from.

Run by Arizona Department of Revenue (state credits); IRS (WOTC). Every figure is from an official page, linked on each card.

Employment of National Guard Members credit

$1,000 per employee on active duty

ONGOING

WHAT YOU GET

A credit of $1,000 for each full-time employee the Arizona National Guard places on active duty.

HOW MUCH

$1,000 per employee per tax year. Unused credit carries forward 5 years. Very few claims: 2 in tax year 2023 per the Legislature's budget staff.

WHO RECEIVES THE MONEY

The employer, as an income tax credit (not refundable).

WHO QUALIFIES

The employee is a member of the Arizona National Guard placed on active duty
Employee is full-time when placed on duty
Served beyond the required annual training period, including state or federal emergencies

Before you start: No pre-approval. Claim on your Arizona return.

Employment of TANF Recipients credit (corporations)

Up to $500, $1,000, $1,500 over 3 years

ONGOING, RARELY USED

WHAT YOU GET

A credit for net new full-time hires who are Arizona TANF recipients, over three years of continuous employment.

HOW MUCH

One-fourth of wages up to $500 in year one, one-third up to $1,000 in year two, one-half up to $1,500 in year three. The Legislature's budget staff counted 0 TANF hires claimed in tax year 2023. The Legislature's Dec 2025 review says the individual credit was repealed in 2021; ADOR's form page still describes both.

WHO RECEIVES THE MONEY

The employer, as a corporate income tax credit (not refundable).

WHO QUALIFIES

Corporate taxpayer
Employee lives in Arizona and receives TANF
Full-time, paid at least minimum wage, employed 90 days in the first year
Health insurance offered if non-TANF employees get it

Before you start: No pre-approval. Claim on your Arizona corporate return.

Work Opportunity Tax Credit (federal)

Lapsed after 12/31/2025

LAPSED

WHAT YOU GET

Formerly 40% of up to $6,000 of first-year wages (maximum $2,400 generally) for certified hires from targeted groups.

HOW MUCH

Not available for people who start work after December 31, 2025, per the IRS page updated July 20, 2026. Hires who started by that date can still be claimed if the certification request was filed within 28 days of the start date.

WHO RECEIVES THE MONEY

The employer, as a federal tax credit.

WHO QUALIFIES

Hire began work on or before December 31, 2025
Certified by the state workforce agency as a targeted group member
At least 400 hours of work

Before you start: Form 8850 had to be filed within 28 days of the start date.

Quality Jobs (New Employment) tax credit

Repealed for TY 2026 onward

REPEALED

WHAT YOU GET

Formerly $3,000 per net new job claimed over 3 years, up to $9,000 in total, under A.R.S. 41-1525.

HOW MUCH

Repealed in the FY 2027 budget law (Tax Omnibus BRB, HB 4168, Chapter 140), applying to tax years starting after December 31, 2025. The Legislature's budget staff report describes it as repealed retroactively to TY 2026.

WHO RECEIVES THE MONEY

The employer, as an income, premium or corporate tax credit.

WHO QUALIFIES

No longer available for new claims for tax year 2026 onward

Before you start: Not applicable.

AVOID THESE

What gets Arizona Tax Credit claims denied.

Claiming WOTC for someone who started work after December 31, 2025.
SOURCE: IRS.GOV
Counting a TANF hire who was not full-time or not employed 90 days in year one.
SOURCE: AZDOR.GOV
Claiming a National Guard credit for an employee not placed on active duty.
SOURCE: AZDOR.GOV
Taking a state credit and the wage deduction for the same TANF wages.
SOURCE: AZDOR.GOV

STRAIGHT ANSWERS

Arizona Tax Credit questions.

Is the Quality Jobs credit still available?

No. The FY 2027 budget law repeals it for tax years starting after 2025. Check with a tax adviser about credits earned earlier.

SOURCE: AZJLBC.GOV

Is WOTC available for 2026 hires?

No. The IRS says it applies to people who begin work on or before December 31, 2025, and the page was last updated July 20, 2026. Some state agency pages still advertise it. Follow the IRS page.

SOURCE: IRS.GOV

What hiring credits are left in Arizona?

The National Guard credit ($1,000 per employee on active duty) and the corporate TANF recipient credit. Both are small and non-refundable.

SOURCE: AZDOR.GOV

Do local boards help with tax credits?

Pima County's business team says it informs employers about incentives and tax credits. Confirm eligibility with the Department of Revenue.

SOURCE: PIMA.GOV

How we checked. Every fact on this page comes from a state agency, a local workforce board or federal regulation, read on September 30, 2026. Where a board publishes nothing, we say so instead of guessing. Programs and funding change often; confirm with the program before you commit. Written by Jason Meehl, founder of Reimbursa. Found an error? Email hello@reimbursa.com.

OTHER PROGRAMS IN ARIZONA

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