BUSINESS CLIMATE

Arizona is a top destination for businesses looking to expand or relocate. With a vibrant and envied economy, pro-business policies and proactive support from government and institutions, the state offers abundant opportunities for growth.

Companies benefit from an expanding skilled workforce, major R&D investments, modern infrastructure and global access. Combined with thriving industries and a high quality of life, Arizona is the ideal place to build a successful future.

Competitive Cost Environment

Tax Climate: Arizona offers a competitive tax environment with one of the lowest corporate tax rates in the country at 4.9%. The state also provides numerous tax credits and incentives to foster business and employment growth. Overall, Arizona’s tax system ranks 14th on the Tax Foundation’s 2024 State Business Tax Climate Index. Source: Tax Foundation, 2024 State Business Tax Climate Index, October 24, 2023.
Regulatory Environment: Arizona has a business-friendly regulatory framework, simplifying processes for starting and operating businesses. The state's commitment to reducing red tape and paperwork makes it considerably easier and more efficient for businesses to locate, expand and start up. Source: Arizona Commerce Authority, Retrieved November 2024.

Economic Growth and Stability

Diversified Economy: Arizona has made significant strides in diversifying and expanding its economy, in research and development, technology, biosciences/healthcare and advanced manufacturing, aerospace and aviation and other sectors that are fueling the global economy. These initiatives have led to epic impacts in the state and across the world. Arizona is globally heralded as one of the best states in which to invest, innovate and succeed. Source: Arizona Commerce Authority, ACA Five-Year Plan, Scaling Arizona’s Global Competitiveness, 2023-2027, Retrieved November 2024.
GDP Growth: Arizona's GDP has consistently grown over the past decade, reflecting a robust and expanding economy. In 2023, the real gross domestic product (GDP) of Arizona was $522.7 billion, an 8% increase from the previous year, when the state's GDP amounted to $484.1 billion. Source: Federal Reserve Bank of St. Louis, September 27, 2024.
Job Growth: The state has experienced significant job growth, with a 2.1% increase in employment year to date as of November 2024. Source: Arizona Office of Economic Opportunity, Retrieved January 2025.
Unemployment Rate: Arizona's unemployment rate in September 2024 was 3.5%,* compared to the national unemployment rate of 4.1%,** an indicator of a continued strong job market in the state. *Source: U.S. Bureau of Labor Statistics, Retrieved November 2024. **Source: U.S. Bureau of Labor Statistics, Retrieved November 2024.

Government and Institutional Support

Arizona Commerce Authority (ACA): The Arizona Commerce Authority (ACA) serves as the state’s official economic development organization, dedicated to growing Arizona’s economy. Through targeted programs and initiatives, the ACA plays a pivotal role in attracting new businesses and supporting those already established in the state. Source: Arizona Commerce Authority, Retrieved November 2024.
Incentives and Grants: Arizona offers numerous economic development incentives, including tax credits, grants and loan programs to support business growth and expansion.

Infrastructure and Connectivity

Transportation: Arizona boasts a well-developed transportation network, including major highways, railroads and airports that facilitate business operations and logistics. Current investments being made in Arizona’s surface transportation system will boost the state’s economy in the short-term by creating jobs and in the long-term will enhance economic competitiveness, stimulate sustained job growth, improve access and mobility, improve traffic safety, reduce travel delays and improve road and bridge conditions. Source: Tripnet, May 2024.
Utilities and Energy: The state provides reliable and affordable utilities, with a focus on sustainable energy sources. Arizona is a leader in solar energy production. In 2023, Arizona ranked among the top five states in the nation in total solar-powered generating capacity from both utility- and small-scale installations, with more than 6,100 megawatts. Source: U.S. Energy Information Administration, Arizona Profile Overview, Retrieved November 2024.

Key Industries

Technology and Innovation: Arizona stands out as a major hub for technology and innovation, especially in sectors like aerospace, defense and semiconductor manufacturing. Industry leaders such as Intel and TSMC have established substantial operations in the state. With its youthful, fast-growing population and pioneering spirit, Arizona has become a prime location for testing and scaling new technologies. Many companies recognize Arizona’s dynamic ecosystem as an ideal setting to drive global change. Source: Arizona Commerce Authority, Retrieved November 2024.
Manufacturing: The state has a strong manufacturing base, contributing significantly to its GDP. Arizona’s manufacturing sector grew by 7.5% between 2021 and 2024. Source: U.S. Bureau of Labor Statistics, Retrieved November 2024.
Healthcare and Biosciences: Arizona is known for its advanced healthcare and biosciences sectors, which have seen substantial growth due to investments in research and development. Arizona’s bioscience industry is fueled by a robust network of premier health care and educational institutions as well as innovators in diagnostics, pharmaceuticals, personalized medicine and genomics, medical devices, cancer treatment, telemedicine, neuroscience and more. In 2023, Arizona institutions received a record-breaking $365 million in National Institutes of Health (NIH) grants. This figure has increased 29% — three times the national average — since 2020. Source: BizJournals, AZ INNO, May 1, 2024.

Weather and Climate

Climate and Lifestyle: The state's warm climate and diverse recreational opportunities contribute to a high quality of life, attracting talent from across the country. Arizona is one of the sunniest states to live in with an average temperature of 82 degrees Fahrenheit and more than 300 days of sunshine annually. Arizona’s predictable weather and extremely low risk of natural disasters is beneficial for individuals, businesses and families looking to relocate. The warm and sunny climate is a draw for anyone tired of cold, dreary winters or those who simply want to enjoy a more active lifestyle outdoors. Source: Visit Arizona, Weather, Retrieved November 2024.

Workforce and Education

Skilled Workforce: Arizona has a well-educated and diverse workforce. The state's universities and community colleges play a critical role in providing a talent pipeline for businesses. The Arizona Office of Economic Opportunity also increases the availability of skilled workers by facilitating connections between industry, workforce and education partners. Source: Arizona Office of Economic Opportunity, Retrieved November 2024.
Educational Initiatives: Arizona has launched a range of educational initiatives to strengthen workforce skills, including the Arizona Career Pathways program, which aligns educational goals with industry needs. Additionally, the Arizona Community College Workforce Scholarship Program, developed in partnership with the state’s community colleges, aims to build a skilled workforce that meets the evolving demands of Arizona’s growing economy. Source: Arizona Governor’s Office, Retrieved November 2024.

Visit the Economic Indicators page to learn more about why Arizona is a premier state for business.

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