Joseph KavetskyThe Senate Finance Committee on Monday voted to recommend passage of SB 1539, which would extend an existing sales tax exemption for clean rooms and clean room equipment—currently reserved for semiconductor manufacturers—to other high-tech industries, including biotechnology, life sciences, and medical device production.
What the bill does
Clean rooms, which are highly controlled environments used in manufacturing and research, are critical for industries that require precise contamination control. SB 1539 would expand the state’s TPT (Transaction Privilege Tax) deduction for any clean room used in manufacturing.
Arizona has long provided tax exemptions for clean rooms used in semiconductor manufacturing, a policy that supporters say has helped establish the state as a national leader in the industry. With companies like Intel and TSMC investing billions in Arizona, proponents of SB 1539 argue that expanding the exemption to other industries could provide a similar boost to biotech and medical device manufacturers, further diversifying the state’s innovation economy.
“I come to you with a clean bill about clean rooms,” said bill sponsor Sen. Frank Carroll (R-Surprise). “Simply put, we’re just taking that limiter out about it being assigned just exclusively to semiconductor manufacturing when clean rooms are used in a lot of other industries.”
Legislation aims to fuel high-tech job growth and investment
Business groups and industry leaders testified in favor of the bill, saying the tax exemption would encourage companies to invest in Arizona and create high-paying jobs.
Joan Koerber-Walker, president & CEO of the Arizona Bioindustry Association, said reducing tax burdens on clean rooms could help keep Arizona-trained talent in the state.
“One of the biggest challenges we face as an industry is how do we attract the companies to fill that space,” Koerber-Walker said. “When they fill that space, they create the jobs, and when they create the jobs, we have more positions for our students that we are educating and exporting out of the state because we don’t have enough jobs to match the number of students.”
Former Honeywell Aerospace CEO Mike Madsen also voiced support, emphasizing that clean rooms are no longer limited to semiconductor production.
“Clean rooms are becoming more important in a wide range of innovation industries beyond semiconductors,” Madsen said. “We have found that there are many other innovation industries that need clean rooms and would benefit from expanding the sales tax exemption.”
Where stakeholders stand
Supporters of the bill include the Arizona Manufacturers Council, the Arizona Chamber of Commerce & Industry, and the Arizona Bioindustry Association.
Rural Arizona Action, a political advocacy group, opposes the bill.
Danny Seiden
Guest Contributor
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