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Biggins Lacy Shapiro & Company 2011 ST A TE INCENTIVES RESOURCE GUIDE Northeast Midwest South West Connec▯cut Illinois Alabama Arizona Delaware Indiana Arkansas California Maine Iowa Florida Colorado Maryland Kansas Georgia Idaho Massachuse▯s Kentucky Louisiana Nevada New Hampshire Michigan Mississippi New Mexico New Jersey Minnesota North Carolina Oregon New York Missouri Oklahoma Utah Pennsylvania Montana South Carolina Washington Rhode Island Nebraska Tennessee Wyoming Vermont North Dakota Texas Ohio Virginia South Dakota West Virginia Wisconsin THE BLS 2011 STATE INCENTIVES RESOURCE GUIDE is intended to provide a detailed sum- mary of the primary and most valuable state and local economic development incen▯ves oﬀered throughout the U.S to help companies evaluate whether incen▯ves can play a meaningful role in their real estate decision making process. As speciﬁc opportuni▯es arise, including reloca▯ons, expansions, consolida▯ons, etc, BLS recommends a more detailed project speciﬁc evalua▯on of the poten▯al value incen▯ves may add. THE COMPETITIVE LANDSCAPE FOR INCENTIVES ECONOMIC DEVELOPMENT INCENTIVES are investments made by state and local governments to inﬂuence corporate decisions on the loca▯on of jobs and investment, to create or enhance the fea- sibility of a private sector project that helps to achieve a community’s economic goals. While in rare instances incen▯ves are the primary drivers that determine if a project will go forward, they are more o▯en part of a broad set of loca▯on factors and are intended to help reduce the costs and ﬁnancial risks to the company thereby improving ROI. The decisive variables in most decisions include loca▯on, labor and business climate. Once a com- pany has narrowed its choices to a short list of loca▯ons in which it can successfully operate, then incen▯ves can become the ‘last variable’ to ﬁnancially diﬀeren▯ate among ﬁnalists. CHALLENGING ECONOMIC CONDITIONS make incen▯ves a key factor in loca▯on decisions. • Unable to increase revenue, companies are under con▯nuing pressure to manage earnings by cu▯ng costs. • Global compe▯▯on intensiﬁes pressure to deliver projects at lowest cost. • New or expanded projects have high hurdle rates. Incen▯ves mi▯gate costs, improve ROI, shorten pay-back periods and manage business risk. A BEST PRACTICES APPROACH to incen▯ves should be mul▯-▯ered, and include a strategy to systemically capture the more modest incen▯ves opportunity that may be imbedded in smaller trans- ac▯ons, which can amount to signiﬁcant savings across an ac▯ve por▯olio over a period of ▯me. INCENTIVES REGULATION EVOLVING. States and communi▯es con▯nue to strengthen their agreements to ensure they will receive expected economic development beneﬁts in considera▯on for incen▯ves, leading to increased incen▯ves monitoring and regulatory requirements. WE ARE BIGGINS LACY SHAPIRO & COMPANY, LLC. For more than 25 years, we have pro- vided professional exper▯se and crea▯vity in the ﬁeld of Loca▯on Economics: the mix of specialized disciplines that enables companies to plan and execute successful loca▯on strategies. We create value on both the demand and supply side of the market for corporate loca▯on decisions. We help companies oﬀset the high costs of a wide range of loca▯on decisions with high-value in- cen▯ves strategies, helping to reduce costs and manage risks associated with opening new facili▯es, reloca▯ng opera▯ons, acquiring undervalued businesses, or consolida▯ng and closing exis▯ng opera▯ons. We work with corporate clients, in coopera▯on with their real estate advisors, to op▯mize the economics of loca▯on decisions involving both individual projects and overall por▯olios of diverse proper▯es. Our professionals evaluate ﬁnancial and opera▯onal loca▯on variables, manage the regulatory challenges to economic development and nego▯ate incen▯ves which can make a diﬀerence in the ﬁnancial performance of our clients’ projects. Our strategic evalua▯ons provide companies with the informa▯on for making smart loca▯on decisions and enable states, ci▯es and holders of surplus proper▯es to posi▯on their loca▯ons to compete for corporate investment. BLS & CO. provides the full range of services required to plan and execute incen▯ves transac▯ons, from ini▯al evalua▯on of poten▯al inducements, through structuring of incen▯ves transac▯ons, nego▯a▯on of documenta▯on and the administra▯on and claiming of beneﬁts. OUR PRINCIPALS Jay Biggins Execu▯ve Managing Director Jcbiggins@BLSstrategies.com Joe Lacy Managing Director Jlacy@BLSstrategies.com Andy Shapiro Managing Director Ashapiro@BLSstrategies.com LEARN MORE: Visit www.BLSstrategies.com OUR OTHER SERVICES: Site Selec▯on | Land Use Planning | Economic Development | Energy Services CONNECTICUT BUSINESS TAX SNAPSHOT Corporate Income Tax: 7.5% Sales Tax: 6% Property tax: $2,381 per Capita TAX CREDITS First Five Program: Newly enacted program provides for a special enhancement of ﬁnancial assistance programs to a limited number of businesses (ﬁve) in years 2012 and 2013 ; permi▯ng the state to combine several exis▯ng tax credits (otherwise mutually exclusive) to reward the ﬁrst ﬁve eligible companies. To be eligible, the project must commit to either 1) crea▯ng 200+ new full-▯me jobs within two years or 2) inves▯ng $25+ million and crea▯ng 200+ jobs within ﬁve years. The First Five Program would eliminate certain caps and thresholds of the current economic development programs. Urban Reinvestment Tax Credit (URA): Primary incen▯ve tool used by the State for projects making a minimum investment of $5 Million. Provides tax credits of up to 100% of investments (maximum award of $100 million) for projects located within certain eligible urban areas that result in job crea▯on. The credit award is discre▯onary and is disbursed over a 10-year schedule. Unused credits can be carried forward or transferred/sold to other CT taxpayers. URA tax credits cannot be combined with Job Crea▯on Tax Credit. Job Crea▯on Tax Credit: The State has the discre▯onary authority to provide a tax credit equal to a percentage of the personal income tax withholding’s associated with new job crea▯on. The credit is up to 60% for up to ﬁve years and cannot be carried forward or transferred. TAX Sales Tax Exemp▯on: The State has the authority to provide an exemp▯on from sales tax on the purchase of construc▯on materials and furniture, ﬁxtures and equipment for projects resul▯ng in high levels of EXEMPTIONS capital investment and job crea▯on or reten▯on. SPECIAL Enterprise Zone:Projects located within an Enterprise Zone, or within a community which contains a zone, ZONING may be eligible for a ﬁve-year tax abatement on real and personal property and 10-year tax credit equal to a por▯on of the corpora▯on business tax that is directly a▯ributable to a business reloca▯on, expansion or renova▯on project. Low-Interest/Forgivable Loan:Loans are available at below market rates. The State also has the discre▯on to forgive a por▯on of the loan principal (convert to a grant) if certain minimum employment and invest- ment thresholds are achieved. GRANTS Grants: The state may provide grants to cover reloca▯on, machinery, equipment and construc▯on costs. LOCAL Municipali▯es in Connec▯cut have the discre▯onary authority to provide certain incen▯ves including INCENTIVES property tax abatements. www.BLSstrategies.com I 609.924.9775 DELAWARE BUSINESS TAX SNAPSHOT Corporate Income Tax: 8.7% Sales Tax: 1.92% Property tax: $695 per Capita Delaware Strategic Fund: The state has the discre▯onary authority to provide ﬁnancial assistance in the GRANTS form of low interest loans, grants, or other crea▯ve instruments to support the a▯rac▯on of businesses that pay sustainable wages. Assistance terms are nego▯ated speciﬁc to each ﬁrm’s individual needs and situa▯on. TAX CREDITS Corporate Income Tax Credits (Targeted Industry & Targeted Areas): Firms within targeted industries qualify for corporate income tax credits of $400 for each new employee and $400 for each new $100,000 investment. Firms within targeted industries who also locate in a targeted area qualify for $650 for each new employee and $650 for each new $100,000 investment. Firms must invest a minimum of $200,000 and create a minimum of ﬁve new posi▯ons. Research and Development Tax Credit: Provides for up to $5 million in R&D tax credits for qualiﬁed research and development expenses in a taxable year. The credit is equal to (a) 10% of the excess of the taxpayer’s total qualiﬁed research and development over its base amount, or (b) 50% of Delaware’s appor▯oned share of the taxpayer’s federal research and development tax credits, with modiﬁca▯ons. In no year may the Delaware research and development tax credits exceed 50% of tax liability. Unused credits may be carried forward. New Economy Jobs Program:Designed to provide an innova▯ve tool to bring high-wage jobs to Delaware and make the state more compe▯▯ve. The legisla▯on provides businesses up to a 65% rebate on with- holding taxes. To qualify, an employer must add at least50 net new jobs for new Delaware taxpayers with each having an annual salary of at least $100,000. Public U▯lity Tax Rebates: Firms mee▯ng the criteria for targeted industry tax credits are eligible for a rebate of 50% of the public u▯li▯es tax imposed on new or increased consump▯on of gas and electricity for ﬁve years. The public u▯li▯es tax rate is 4.25%. The u▯lity tax on the consump▯on of electric by licensed manufacturers and food or agribusiness processors is reduced from 4.25% to 2%. Addi▯onally, electric consumed in the manufacturing of automobiles is exempt from the u▯lity tax. www.BLSstrategies.com I 609.924.9775 BUSINESS TAX SNAPSHOT MAINE Corporate Income Tax: <8.9% Sales Tax: 5% Property tax: $1,636 per Capita TAX CREDITS Employment Tax Increment Financing: For-proﬁt, non-retail, non-u▯lity businesses adding a minimum of ﬁve net new Maine jobs within a two-year period,may be eligible for Maine’s Employment Tax Increment Financing. Under the ETIF program, businesses are eligible to receive a reimbursement of up to 80% of their new employees’ Maine income tax withholding’s for up to 10 years. SPECIAL Pine Tree Development Zones: Targeted industries loca▯ng in one of the state’s Pine Tree Development ZONING Zones may be eligible to receive Tax Credits, Tax Reimbursements, and Rate Reduc▯ons. This program works with exis▯ng programs and enhances them for speciﬁc businesses that ﬁt par▯cular economic and geographic criteria. Depending on the county, tax credits may last between ﬁve and ten years. TRAINING Governor’s Training Ini▯a▯ve:Provides training assistance for employers paying at least 85% the PROGRAMS average wage in the occupa▯on. Develops and coordinates training for ﬁrms intending to expand or locate in Maine, reorganize a workplace to remain compe▯▯ve, or upgrade worker skills. TAX Sales Tax Exemp▯ons: Sales of machinery and equipment used by the purchaser directly and primarily in EXEMPTIONS the produc▯on of tangible personal property for later sale or use, items consumed or destroyed directly or primarily in produc▯on, and repair and replacement parts for qualiﬁed produc▯on equipment may be exempt from Sales Tax. www.BLSstrategies.com I 609.924.9775 MARYLAND BUSINESS TAX SNAPSHOT Corporate Income Tax: 8.25% Sales Tax: 6% Property tax: $1,171 per Capita TAX CREDITS Job Crea▯on Tax Credit (JCTC): Tax credit of up to $1,500 per job for new, full-▯me jobs. To qualify, businesses must create 60 new, full-▯me jobs during a 24-month period (25 new full-▯me jobs if loca▯ng or expanding in a Priority Funding Area). Unused credit may be carried forward for ﬁve years following the credit year. One Maryland Tax Credit: Tax credits of up to $5 Million for projects making signiﬁcant capital investments and crea▯ng new jobs. Credits are fully refundable. Projects must be located in a “distressed” county. Research and Development Tax Credit: Provides businesses with R&D tax credits that incur qualiﬁed research and development expenses. The Basic R&D tax credit is 3% of eligible R&D expenses that exceed the ﬁrms average R&D expenses over the last four years. The Growth R&D tax credit is 10% of eligible R&D expenses that exceed the ﬁrms average R&D expenses over the last four years. Enterprise Zone:Businesses loca▯ng in a Maryland Enterprise Zone may be eligible for income tax and real SPECIAL ZONING property tax credits in return for job crea▯on and investments. Businesses located in one of three focus areas are also eligible for personal property tax credits. FORGIVABLE State has the authority to provide low-interest ﬁnancing. The State also has the ability to forgive a por▯on LOAN of the principal if certain employment and investment condi▯ons are achieved. TRAINING Maryland Industrial Training Program (MITP) : Provides grants to reimburse companies for costs PROGRAMS associated with new workforce development and training ac▯vi▯es. This program is to retain or assist in the expansion of exis▯ng industries. GRANTS Grants/Closing Fund: The Maryland Economic Development Assistance and Authority Fund (MEDAAF) provides loans and grants to businesses and local jurisdic▯ons. Major economic development projects may receive loans of up to $10 million dollars while local municipali▯es may receive up to $5 million in loans or $2 million in condi▯onal loans and grants to assist new or expanding businesses. LOCAL Coun▯es and municipali▯es in Maryland have the authority to provide certain incen▯ves including INCENTIVES property tax abatements, grants and revolving loans. www.BLSstrategies.com I 609.924.9775 MASSACHUSETTS BUSINESS TAX SNAPSHOT Corporate Income Tax: 8.8% Sales Tax: 6.25% Property tax: $1,789 per Capita TAX CREDITS The Economic Development Incen▯ve Program (EDIP): Projects mee▯ng certain employment and/or loca▯on criteria can qualify for a tax credit of up to 10% of new investment. Manufacturing projects crea▯ng at least 100 new jobs can qualify for a 40% credit (refundable). Massachuse▯s Investment Tax Credit (ITC): Provides manufacturers, certain R&D corpora▯ons and corpora▯ons engaged primarily in agriculture or commercial ﬁshing with a 3% credit against their corporate excise tax. Research and Development Tax Credit: Provides qualifying companies a tax credit equal to 10% for Qualiﬁed Expenses deﬁned as any research expense incurred which would qualify for the Federal R&D tax credit and a Basic Research Payments Credit. The credit can be taken in conjunc▯on with the state’s Investment Tax Credit or Economic Development Incen▯ve Program. Unlike some of the other credits, the R&D tax credit may reduce the corpora▯on’s tax to the minimum tax of $456. Unused credits can be carried forward for at least 15 years. GRANTS Job Crea▯on Incen▯ve Program:Biotechnology and medical device manufacturing companies are eligible to receive incen▯ve payments for new job crea▯on. To qualify, the company must create 10 or more eligible jobs during a single calendar year to be en▯tled to an incen▯ve payment equal to 50% of the eligible jobs’ salary mul▯plied by the applicable income tax rate of the newly hired persons. LOCAL Tax Increment Financing (TIF): Municipali▯es have the authority to grant tax abatements for up to 20 INCENTIVES years. TAX Sales & Use Tax Exemp▯ons:All machinery, replacement parts, and materials used by manufacturing and EXEMPTIONS R&D corpora▯ons in research and development are exempt. www.BLSstrategies.com I 609.924.9775 NEW HAMPSHIRE BUSINESS TAX SNAPSHOT Corporate Income Tax: <8.5% Sales Tax: None Property tax: $2,317 per Capita TAX CREDITS Economic Revitaliza▯on Zone Tax Credits (ERZ Tax Credit) Program: Provides qualifying new and exis▯ng businesses tax incen▯ves for projects that meet certain state economic objec▯ves, such as s▯mula▯ng economic redevelopment, expanding the commercial and industrial base, crea▯ng new jobs, reducing sprawl, and increasing tax revenue. The tax credit can be used against the Business Proﬁts Tax and Busi- ness Enterprise Tax for up to 100% of the investment. TRAINING Job Training Fund: Private businesses located in New Hampshire and businesses intending to locate in PROGRAMS the State, and who elect to pay into the unemployment trust fund are eligible for the Job Training Fund. Training programs may include, but shall not be limited to: structured, on-site laboratory or classroom training; basic skills; technical skills; quality improvement; safety; management and supervision; English as a Second Language. Training funds are distributed on a cost-reimbursement basis. A minimum 1:1 cash match is required. SPECIAL Coos County Job Crea▯on Tax Credit: The credit is granted to businesses for each new, full-▯me, year- ZONING round employee hired in Coos County for which actual wages paid, including the amount paid by the employer for medical and dental beneﬁts, equals or exceeds 150% of the current state minimum wage. The amount of the credit is based upon the propor▯on that the wage for the new employee exceeds the minimum wage. If the propor▯on of the wage for the new employee is equal to or greater than 150% of the minimum wage but not less than 200% of the minimum wage, the amount of the credit shall be $750. If the propor▯on of the wage for the new employee is equal to or greater than 200% of the minimum wage, the amount of the credit shall be $1,000.00. www.BLSstrategies.com I 609.924.9775 NEW JERSEY BUSINESS TAX SNAPSHOT Corporate Income Tax: 9% Sales Tax: 7% Property tax: $2,625 per Capita GRANTS Business Employment Incen▯ve Program (BEIP): The State has the discre▯onary authority to provide annual cash grants to projects reloca▯ng or hiring new jobs in the State. The grants are calculated as a percentage of the net increase in personal income taxes associated with the new employment, with a maximum aggregate grant of $50,000 per job over 10 years. *Primary tool for a▯rac▯ng new businesses. Business Reten▯on and Reloca▯on Assistance Grant (BRRAG): Recently amended by the State Legislature, the BRRAG provides a one ▯me state corporate income tax credit to companies reloca▯ng from one loca▯on to another in New Jersey or making capital investment equal to the value of the tax credits. Tax credit increases with the scale of the jobs (maximum credit is $13,500 per employee). *Primary tool for reten▯on of current businesses. Customized Training: The State can provide grants to reimburse up to 50% of the cost of employee train- ing. TAX CREDITS Economic Redevelopment & Growth Grant (ERGG):Provides tax-increment ﬁnancing to close demonstra- ble ﬁnancing gaps and compe▯▯ve cost gaps between NJ and alterna▯ve loca▯ons. The program enables the State or municipality to provide grants through a par▯al rebate of certain future ﬂows of incremental taxes generated by a new project – e.g, corporate income tax, sales taxes, etc. Urban Transit Hub Tax Credit (UTHTC):Allows the state to award corporate income tax credits to projects involving new construc▯on or large-scale renova▯on where the capital investment exceeds $50,000,000. The project must be located within one of the statutorily designated ci▯es (including Newark and Jersey City), and within one-half mile of a designated transit hub or a site served by rail. The tax credits are equal to up to 100% of the amount of the qualifying investment for corporate projects and 20% for residen▯al projects. SPECIAL Urban Enterprise Zone (UEZ): Projects located in one of the State’s 17 Urban Enterprise Zones (including ZONING Newark and Jersey City), are eligible to receive certain tax incen▯ves, including an exemp▯on from sales tax on construc▯on materials, FFE and other taxable purchases. LOCAL Municipali▯es in New Jersey have the discre▯onary authority to provide certain incen▯ves including prop- INCENTIVES erty tax abatements, grants and low-interest ﬁnancing. Municipali▯es also have the authority to par▯ci- pate in the Economic Redevelopment & Growth Grant program by pledging certain local tax revenue. www.BLSstrategies.com I 609.924.9775 NEW YORK BUSINESS TAX SNAPSHOT Corporate Income Tax: 7.1% Sales Tax: 4% Property tax: $2,009 per Capita GRANTS Capital Grant: State has provided cash grants to projects resul▯ng in net job crea▯on. Grants range based on loca▯on and quality of employment. TAX Excelsior Jobs Program (replaces the Empire Zone Program):Newly enhanced program provides job CREDITS crea▯on and investment incen▯ves to companies in select industries. This program is comprised of four incen▯ves; 1) Jobs Tax Credit equal to a percentage of new wages for up to 10 years. 2) Investment Tax Credit provides for up to 2% of total qualiﬁed investments; 3) Research & Development Tax Credit and 4) Real Property Tax Credit over a 10 year period. All tax credits are fully refundable. Research and Development Tax Credit: Investments in research and development facili▯es are eligible for a 9% corporate tax credit. Addi▯onal credits are available to encourage the crea▯on and expansion of emerging technology businesses, including a three-year job crea▯on credit of $1,000 per employee and a capital credit for investments in emerging technologies. Investment Tax Credit (ITC): Businesses that create new jobs and make new investments in produc▯on property and equipment may qualify for tax credits of up to 10% of their eligible investment. New busi- nesses may elect to receive a refund of certain credits, and all unused credits can be carried forward for 15 years. UTILITY Recharging New York: Newly enhanced Power for Jobs Program provides low cost power to manufactur- ers that create or retain jobs, for up to seven years. DISCOUNT TAX Sales Tax Exemp▯ons: New York State oﬀers exemp▯ons for purchases of produc▯on machinery and EXEMPTIONS equipment, research and development property, and fuels/u▯li▯es used in manufacturing and R&D. Other exemp▯ons may be available through local Industrial Development Agencies (IDA.) LOCAL To encourage development, expansion, and improvement of commercial property, many municipali▯es INCENTIVES oﬀer a 10-year property tax abatement to oﬀset increased assessments due to improvements to business and commercial property. www.BLSstrategies.com I 609.924.9775 PENNSYLVANIA BUSINESS TAX SNAPSHOT Corporate Income Tax: 9.9% Sales Tax: 6% Property tax: $1,239 per Capita TAX CREDITS Job Crea▯on Tax Credit:Provides tax credits against State corporate income tax equal to $1,000 per newly created job (state has the authority to enhance). To qualify, companies must create at least 25 new jobs or expand the exis▯ng workforce by at least 20%. Credits can be carried forward ﬁve years. Opportunity Grant Program: The state has the authority to provide discre▯onary grant funds to GRANTS businesses that locate, expand, or maintain opera▯ons at a site in Pennsylvania and invest capital and create or retain jobs at the site; with the intent of closing a compe▯▯ve gap with out-of-state alterna▯ves. Grants may be used for project costs including job training; construc▯on or rehabilita▯on of infrastructure; acquisi▯on of land, buildings, etc. TRAINING Customized Job Training: Discre▯onary grant to reimburse training expenditures equal to up to 75% of PROGRAM eligible costs incurred. Typical cost include instruc▯onal costs; supplies; consumable materials; contracted services; relevant travel costs for local educa▯on agency project coordinators. SPECIAL Keystone Opportunity Zone: The KOZ eliminates speciﬁc state and local taxes within speciﬁc ZONING underdeveloped and under u▯lized areas. There are binding ordinances and resolu▯ons passed gran▯ng the waiver, abatement or exemp▯on of certain state and local taxes. The tax burden may be reduced to zero. State and local exemp▯ons apply to all sales of services or tangible personal property (other than motor vehicles) to a business, for the exclusive use by the business at its facility. TAX Municipali▯es in Pennsylvania have the authority to provide addi▯onal incen▯ves including a 10-year tax EXEMPTIONS abatement. LOCAL Sales & Use Tax Exemp▯ons:Purchases of materials to be consumed in manufacturing or those to be used INCENTIVES directly in manufacturing (e.g., equipment, raw materials, etc.) are exempt. PROPOSED BUT Pennsylvania First Program: Would combine three exis▯ng programs - Opportunity Grant program, NOT APPROVED Customized Job Training and Infrastructure Development Program - to streamline ﬁnancing op▯ons for capital improvement costs, job training and infrastructure projects; The goal of PA First is to be more ﬂexible and responsive by elimina▯ng exis▯ng restric▯ons and limita▯ons. Liberty Loan Fund:Would consolidate six exis▯ng authori▯es and their respec▯ve funds, streamlining into one applica▯on process to be overseen by an authority of 15 board members. This Fund would combine the Commonwealth Financing Authority, Pennsylvania Industrial Authority, Machinery and Equipment Loan Fund, Pennsylvania Minority Business Development Fund, remaining Tobacco Se▯lement Fund investments and the Small Business First Fund. www.BLSstrategies.com I 609.924.9775 RHODE ISLAND BUSINESS TAX SNAPSHOT Corporate Income Tax: 9% Sales Tax: 7% Property tax: $1,957 per Capita TAX Jobs Development Act (Corporate Income Tax Reduc▯on for Job Crea▯on): Provides companies with an REDUCTION incremental reduc▯on in the corporate income tax rate based on the crea▯on of new employment over a three-year period (10 new jobs for companies with abaseline employment below 100 and 50 new jobs for companies with baseline employment above 100). The corporate income tax may be reduced to as low as 3%. SPECIAL Enterprise Zones: Any cer▯ﬁed business facility within a state-designated Enterprise Zone or a Federally- ZONING designated Enterprise Community in Rhode Island may qualify for certain tax incen▯ves including Business Tax Credits and Business Owner Modiﬁca▯on. TRAINING Job Training Tax Credit: Provides companies with a tax credit against the corporate income tax (or the PROGRAMS insurance premium tax) equal to 50% of eligible training expenditures for new or exis▯ng employees. Employees must be full-▯me and earn at least 150% of the RI minimum wage. Training plans must be ﬁled with the Rhode Island Human Resources Investment Council for prior wri▯en approval. The credit is capped at $5,000 per employee over a three-year period. Job Training Grants: The Rhode Island Human Resources Investment Council oﬀers a training program for business and industry funded through a job development assessment of 0.21% on the ﬁrm’s taxable payroll. This pool of money is available for industry to create customized training programs tailored specif- ically for a company and free from income and other restric▯ons imposed by federally-funded programs. TAX CREDITS Manufacturing Investment Tax Credit: Manufacturers may receive a 4% tax credit against the RI corporate income tax or business personal property tax. Unused credits can be carried forward for up to seven years. TAX Sales Tax Exemp▯on: Sales, storage, use, or other consump▯on of tools, dies, and molds, and machinery EXEMPTIONS and equipment (including replacement parts), and related items to the extent used in an industrial plant in connec▯on with the actual manufacture, conversion, or processing of tangible personal property are exempt from sales tax. www.BLSstrategies.com I 609.924.9775 VERMONT BUSINESS TAX SNAPSHOT Corporate Income Tax: <8.5% Sales Tax: 6% Property tax: $1,896 per Capita TAX CREDITS Tax Stabiliza▯on and Property Tax Alloca▯on Program:The state has the discre▯onary authority to provide addi▯onal property tax relief, earned and installments paid only if targets are met and main- tained. The program is statutory, but it is the discre▯on of the Vermont Economic Progress Council who determines if the company meets the requirements. GRANT Vermont Employment Growth Incen▯ve (VEGI):Provides a grant, based on the revenue return generated to the State based on qualifying job and payroll crea▯on and capital investments. Certain performance targets must be met. TRAINING The Vermont Training Program: The state oﬀers three training ini▯a▯ves: new employment, upgrade, PROGRAMS and crossover training for incumbent workers, pro viding funds to train employees in new and exis▯ng businesses in Manufacturing, Informa▯on Technology, Healthcare, Telecommunica▯on, and Environmen- tal Engineering. Training programs may include on-the-job, classroom, skill upgrade, or other specialized training which are mutually agreed upon between the state and employer. www.BLSstrategies.com I 609.924.9775 BUSINESS TAX SNAPSHOT ILLINOIS Corporate Income Tax: 9.5% Sales Tax: 6.25% Property tax: $1,662 per Capita GRANTS Large Business Development Program (LBDP): Grants are available for major expansion or reloca▯on projects that create and/or retain a large number of jobs. The funds may be used for bondable business ac▯vi▯es, including ﬁnancing the purchase of land or buildings, building construc▯on or renova▯on, and certain types of machinery and equipment. Employer Training Investment Program (ETIP): The state can provide grants which can reimburse new or expanding companies for up to 50% of the cost of training their employees. TAX CREDITS Economic Development For a Growing Economy Tax Credit Program (EDGE):Provides non-refundable tax credit against corporate income taxes over a period of up to 10 years, equal to a percentage of the new personal tax withholding’s generated by the new jobs. To qualify, the company must make an investment of at least $5 million in capital improvements and create a minimum of 25 new full-▯me jobs. SPECIAL Enterprise Zone Program: Business loca▯ng in one of Illinois’ dedicated Enterprise Zones may qualify for certain incen▯ves including sales tax exemp▯on, an investment tax credit of .5% of qualiﬁed property, a ZONING state u▯lity tax exemp▯on on gas, electricity and telecommunica▯on, a Jobs Tax Credit for each job created in the zone as well as other incen▯ves. TAX Property Tax Exemp▯ons:All personal property of businesses; inventories, machinery, and intangibles are EXEMPTIONS exempt. High Impact Business (HIB): The state has the authority to provide an array of tax credits and tax exemp▯ons to s▯mulate large-scale economic development projects. The company must make an investment of at least $12 million in capital improvements and create a minimum of 500 full-▯me jobs or an investment of $30 million causing the reten▯on of 1,500 full-▯me jobs. LOCAL Municipali▯es or local governments have the authority to provide certain incen▯ves including property tax abatements and Tax Incremental Financing. INCENTIVES www.BLSstrategies.com I 609.924.9775 INDIANA BUSINESS TAX SNAPSHOT Corporate Income Tax: 8.5% Sales Tax: 7% Property tax: $1,089 per Capita TAX CREDITS Economic Development for a Growing Economy Program (EDGE): A refundable tax credit is available to companies that create new or retain exis▯ng jobs in Indiana. Tax credits are calculated as a percentage of personal tax withholding for net new Indiana jobs, for up to 10 years. If EDGE is used to retain jobs, the wages for those jobs must be above average. Hoosier Business Investment Tax Credit Program: Provides tax credit against a company’s tax liability, based on a company’s qualiﬁed capital investment. The ﬁnal credit amount is determined by the Indiana Economic Development Corpora▯on, with a credit award up to 10% of the qualiﬁed capital investment that may be carried forward for nine years. Headquarters Reloca▯on Tax Credit: Companies reloca▯ng their headquarters to Indiana resul▯ng in a minimum of 75 jobs are eligible for a tax credit equal to 50% of its cost of reloca▯ng. TRAINING Customized Training: Provides special funds for training new and exis▯ng Indiana-resident workers. The PROGRAMS Skills Enhancement Fund (SEF) reimburses eligible training expenses for a two year-term. Companies may reapply for addi▯onal SEF funds a▯er their ini▯al two-year term. The State also has the discre▯onary funds to reimburse – up to $200,000 – for retraining exis▯ng workers. Separate supplemental grant awards may be available for training new employees. LOCAL Municipali▯es in Indiana have the discre▯onary authority to provide certain incen▯ves including property tax abatements, grants and low-interest ﬁnancing. INCENTIVES LOW INTEREST The state and local en▯▯es have the authority to providPrivate Ac▯vity Bonds also called Industrial Revenue Bonds (IRBs) or Industrial Development Bonds (IDBs), generally exempt from federal income FINANCING taxes for investors. TAX Sales & Use Tax Exemp▯ons : Manufacturing raw materials, equipment, power, electricity & u▯li▯es; EXEMPTIONS wholesale sales items used in produc▯on; sales made in interstate commerce; and research and develop- ment equipment are exempt from sales and use tax. www.BLSstrategies.com I 609.924.9775 BUSINESS TAX SNAPSHOT IOWA Corporate Income Tax: <12% Sales Tax: 6% Property tax: $1,245 per Capita TAX CREDITS High Quality Jobs Crea▯on Program (HQJCP): Provides tax credits and exemp▯ons to oﬀ-set the cost incurred to locate, expand or modernize a facility. Some of the incen▯ves include a local property tax exemp▯on of up to 100% of the value added to the property and an investment tax credit equal to a per- centage of the qualifying investment. New Jobs and Income Program: Provides corporate income tax credits equal to 6% of the state unemployment insurance taxable wage base to businesses increasing their workforce by at least 10%. The maximum amount per employee is $1,422 and unused tax credits may be carried forward up to 10 years. Research and Development Tax Credit: Provides R&D tax credits equal to 6.5% of the company’s allo▯ed share of qualifying research expenditures in Iowa for increasing research ac▯vi▯es within the state. GRANTS New Jobs Training Program: Provides reimbursement grants to new or expanding companies for some of the cost of training their employees. SPECIAL Enterprise Zone Program: Businesses located or expanding in the zone may be eligible for certain ZONING incen▯ves including property tax exemp▯ons on land and buildings; an investment tax credit (up to 10% against state corporate income taxes); refunds of sales, services, or use taxes paid to contractors during construc▯on; R&D ac▯vi▯es credit (up to 13% against corporate income taxes); and double the usual in- come tax withholding increment to use for job training. Municipali▯es have the discre▯onary authority to provide certain incen▯ves including property tax LOCAL INCENTIVES abatements. The increase in assessed value due to new construc▯on, rehabilita▯on or renova▯on may be le▯ untaxed for a term set by local ordinance. Municipali▯es also have the authority to prTaxde Increment Financing, designed to ﬁnance the public costs associated with a private development project. The property tax increases resul▯ng from a development will be targeted to repay the public investment required by a project. www.BLSstrategies.com I 609.924.9775 BUSINESS TAX SNAPSHOT KANSAS Corporate Income Tax: <7% Sales Tax: 5.3% Property tax: $1,323 per Capita TAX CREDITS Promo▯ng Employment Across Kansas (PEAK): Provides qualiﬁed companies reloca▯ng jobs to Kansas the ability to retain 95% of the payroll withholding tax of the relocated jobs over a period of ﬁve or more years. Companies must create 10+ new jobs within tw o years in metropolitan areas or ﬁve new jobs within two years in all other coun▯es of the state. High-impact projects that create 100 new jobs within ﬁve years can retain 95% of payroll withholding tax for seven to ten years. Reinvestment Tax Credit: Provides a 1% corporate income tax credit on the qualiﬁed capital investment of an eligible company. Companies that operate an eligible business, pay above-average wages and invest in employee training may be eligible to increase the credit to 10%. Research Tax Credit: Kansas oﬀers an income tax credit equal to 6.5% of a company’s investment in research and development above an expenditure of the previous three-year period. Twenty-ﬁve percent of the allowable annual credit may be claimed in any one year. TRAINING Major Projects and Comprehensive Training (IMPACT) or Kansas Industrial Training (KIProvides PROGRAMS ﬁnancial assistance to help oﬀset a company’s training costs, paying a nego▯ated por▯on of the costs. SPECIAL Enterprise Zone Program: The en▯re state of Kansas is designated as an Enterprise Zone. Projects ZONING located in Kansas are eligible to receive certain incen▯ves including corporate income tax credits for new job crea▯on and qualiﬁed capital investment. Eligibility depends on the type of business and the number of jobs created. The investment tax credit is 1% of qualiﬁed investment. Unused credits may be carried forward. LOW Wind and Solar Bond Financing: The state has the authority to issue up to $5 million in bond ﬁnancing INTEREST for eligible wind and solar energy manufacturers loca▯ng in Kansas. The bonds are paid oﬀ from the FINANCING payroll withholding tax of the new jobs. To qualify, aproject must create at least 200 new jobs within ﬁve years, pay at least a $32,500 average salary and generate a minimum capital investment of $30 million. LOCAL Ci▯es or coun▯es in Kansas have the authority to exempt real property from ad valorem taxa▯on. A total INCENTIVES or par▯al tax abatement may be in eﬀect for up to 10 years a▯er the calendar year in which the business commences its opera▯ons. TAX Both the Enterprise Zone Program and High Performance Incen▯ve Program oﬀer a 100% sales tax exemp▯on on the purchase of labor and materials to construct or remodel a facility, as well as on the EXEMPTIONS machinery, equipment, furniture and ﬁxtures used in the facility. www.BLSstrategies.com I 609.924.9775 KENTUCKY BUSINESS TAX SNAPSHOT Corporate Income Tax:< 6% Sales Tax: 6% Property tax: $651 per Capita TAX Kentucky Business Investment (KBI) Program: Provides income tax credits and wage assessments to new CREDITS and exis▯ng agribusiness, regional and na▯onal headquarters, manufacturing companies, and non-retail service or technology-related companies that locate or expand opera▯ons in Kentucky. Kentucky Reinvestment Act (KRA): Provides tax credits to exis▯ng Kentucky companies engaged in manufacturing and related func▯ons on a permanent basis for a reasonable period of ▯me and is expected to invest at least $2,500,000 in eligible equipment and related costs. Kentucky Environmental Stewardship Act (KESA): Provides companies manufacturing products that have a substan▯al posi▯ve impact on human health and the environment. Companies with projects approved under KESA must have at least $5 million in eligible cost and can poten▯ally recover up to 25% of the projects ﬁxed asset cost and 100% of employee skills training. The tax incen▯ve is available for recovery over a 10-year period. Incen▯ves for Energy Independence Act (IEIA): Companies mee▯ng minimum investment requirements and opera▯ng in alterna▯ve fuel using biomass, alterna▯ve fuel using coal, or renewable power facility that meets minimum electric output standards based upon the power source, are eligible to receive numerous tax incen▯ves. GRANTS Customized training: The state can provide credits and grant funds to support training for exis▯ng busi- nesses or targeted industry-speciﬁc training. Credits can be used against income tax. Grant funds must be matched by the company. LOW INTEREST The state oﬀers a variety of low-interest or forgivable loans to encourage economic development business FINANCING expansion and job crea▯on. REFUNDS Kentucky Enterprise Ini▯a▯ve Act (KEIA):Provides a refund of sales and use tax paid by approved companies for building and construc▯on materials permanently incorporated as an improvement to real property and for eligible equipment used for research and development or data processing. LOCAL Local governments have the authority to provide certain incen▯ves including various types ofTax INCENTIVES Increment Financing, Industrial Revenue Bonds, and low-interest loans. TAX Property exemp▯on: Manufacturing machinery is exempt from local property taxa▯on and is subject only to state taxa▯on at the rate of $0.15 per $100 of assessed valua▯on. Goods in transit are exempt from EXEMPTIONS state, city, county, and school district personal property taxes. Sales & Use Tax Exemp▯ons: Pollu▯on-control equipment, industrial machinery and equipment and industrial fuels and raw materials are exempt from sales & use taxes. www.BLSstrategies.com I 609.924.9775 MICHIGAN BUSINESS TAX SNAPSHOT Corporate Income Tax: 4.95% Sales Tax: 6% Property tax: $1,409 per Capita TAX CREDITS Michigan Economic Growth Authority Standard Job Crea▯on Tax Credits (MEGA):Provides tax credits for new or expanding business. To qualify, companies must create at least 50 new jobs (High-Tech companies must create 25 new full-▯me jobs) within ﬁve years. Each credit may be awarded for up to 20 years and up to 100% of the wages and employer-paid health care beneﬁts mul▯plied by the personal income tax rate in eﬀect at the beginning of the company tax year. Credits are refundable. Michigan NextEnergy Authority (MNEA) Act Tax Credit: Tax credits and exemp▯ons are available to companies engaged in research, development, or manufacturing of alterna▯ve energy technologies. SPECIAL Renaissance Zones:Projects located in the Renaissance zones are eligible to receive certain tax incen▯ves, ZONING including property tax abatement (general property taxes on land and buildings are nearly 100% abated), tax credit against the Michigan Business Tax, city corporate income taxes (100% abated) and exemp▯ons from U▯lity Users Tax. TRAINING Economic Development Job Training (EDJT) Program: Reimbursements grants are available to new or PROGRAMS expanding companies to help oﬀset employee training(averaging $1,000 per new employee and $500 for each exis▯ng employee). GRANTS Infrastructure Grants: Financial assistance is available to local governments to create infrastructure such as water systems, wastewater systems, transporta▯on projects, site improvement, or other speciﬁc infrastructure improvements required to support economic growth that provide support for new or expanding industry. TAX Municipali▯es have the authority to provide a tax abatement on real and personal property for EXEMPTIONS manufacturing facili▯es. www.BLSstrategies.com I 609.924.9775 MINNESOTA BUSINESS TAX SNAPSHOT Corporate Income Tax: 9.8% Sales Tax: 6.875% Property tax: $1,273 per Capita TAX Research and development Tax Credit: Provides a deduc▯on against gross income tax for research and CREDITS development expenses. A credit against the tax is allowed for a percentage of qualiﬁed expenditures made within Minnesota. SPECIAL Opportunity Building Zone (OBZ): Projects located or expanding in one of the 10 Opportunity Zones ZONING within the state is eligible to receive a wide variety of local and state tax exemp▯ons including corporate franchise tax; Income tax for operators or investors, including capital gains tax; Sales tax on goods and services used in the zone; Property tax on commercial and industrial improvements but not on land; Wind energy produc▯on tax; and employment tax credit for high paying jobs. GRANTS Minnesota Jobs Skills Partnership program: Grants, up to $400,000, are available to educa▯onal ins▯tu▯ons that partner with businesses to develop new-job training or retraining for exis▯ng employees. LOCAL Local governments have the authority to provide property tax abatements for eligible economic develop- INCENTIVES ment projects and Tax Increment Financing, designed to ﬁnance the public costs associated with a private development project. The property tax increases resul▯ng from a development will be targeted to repay the public investment required by a project. TAX Sales and use exemp▯ons: In addi▯on to the sales tax exemp▯on for manufacturers’ capital equipment, EXEMPTIONS sales of property delivered outside the state are exempt from sales tax under certain condi▯ons. Materials used or consumed in agricultural, industrial, or services produc▯on for retail sale and petroleum products subject to other excise taxes are exempt from sales and use taxes. Property tax exemp▯ons: Personal property, such as inventories, stocks of merchandise, and most machinery and equipment installed for business purposes, is exempt from property taxa▯on. www.BLSstrategies.com I 609.924.9775 MISSOURI BUSINESS TAX SNAPSHOT Corporate Income Tax: 6.25% Sales Tax: 4.25% Property tax: $924 per Capita TAX Chapter 353 Tax Abatement:Program can be u▯lized by ci▯es to encourage the redevelopment of blighted ABATEMENTS areas by providing real property tax abatement. Tax abatement is available for a period of up to 25 years, can be up to 100% for ﬁrst 10 years and 50% for last 15 years. TAX CREDITS Quality Jobs Program: “Technology” or “High Impact” businesses are eligible to receive tax credits which are refundable, transferable and/or saleable. The program beneﬁts are based on a percentage of the payroll of the new jobs. Maximum credit is 5% of payroll for ﬁve years. Build MO Bonds Program: Provides tax credits to projects crea▯ng a minimum of 500 new jobs and $10 million of investment (100 new jobs and $15 million of investment for manufacturers). Credits are refund- able. Bonds are issued to public or private infrastructure to support the project. Minimum bond issue is $500,000. SPECIAL Enhanced Enterprise Zone: Projects loca▯ng in an Enhanced Enterprise Zone are eligible to receive tax ZONING credits that can be applied to Income Tax, excluding withholding tax. Tax credits can only be applied to tax liability for the year in which they were earned. The tax credits are refundable; or may be transferred, sold or assigned. The sale price cannot be less than 75% of the par value of such tax credits. TAX Sales Tax Exemp▯on: Machinery and equipment used to establish a new manufacturing facility or expand an exis▯ng manufacturing facility is exempt from local and state sales/use tax, provided such machinery/ EXEMPTIONS equipment is used directly to manufacture a product ul▯mately intended for sale. Chapter 100 Sales Tax Exemp▯on:Provide a sales tax exemp▯on on tangible personal property purchased through Chapter 100 bonds for non-manufacturing purchases. Companies eligible for Chapter 100 bond ﬁnancing include manufacturing, warehousing, distribu▯on, oﬃce, research and development, agricul- tural processing, and services in interstate commerce. LOCAL Municipali▯es in Missouri have the discre▯onary authority to provide certain incen▯ves including Local Tax INCENTIVES Increment Financing (Local TIF). Areas eligible for Local TIF must be designated as “Blighted”, “Conserva- ▯on” or for “Economic Development”. www.BLSstrategies.com I 609.924.9775 MONTANA BUSINESS TAX SNAPSHOT Corporate Income Tax: 6.75% Sales Tax: none Property tax: $1,221 per Capita TAX New or Expanding Industry Wage Credit: A manufacturing corpora▯on may receive a corpora▯on license CREDITS tax credit of 1% of wages paid to new employees for the ﬁrst three years of opera▯on and expenses. GRANTS The Primary Sector Workforce Training Grant program: Provides grant funds to businesses for training new and exis▯ng full-▯me workers (max of $5,000 per full-▯me employee.) Speciﬁc guidelines must be met and companies must provide $1 of match for every $3 dollars of grant funds. LOW The State has various structures to deliver low-interest ﬁnancing through theMontana Board of INTEREST Investments Loan Par▯cipa▯on Program and the Value-Added Loan Program. FINANCING Loan funds through the Montana Board of Investments may be available to local government for public infrastructure improvements to support economic development. The infrastructure improvements are essen▯ally a grant to the business as a direct reduc▯on of project development costs. The business may write oﬀ up to 100% of the related fees and assessments paid to the local government on its Montana income tax as it documents the related job crea▯on. The beneﬁt to the company is limited by the number and quality of jobs created and the ability of the business to write oﬀ the tax credits on its actual income tax liability. Infrastructure loans are limited to $16,666 per job created as a result of the project. The minimum loan amount is $250,000. Big Sky Economic Development Fund:Trust fund dollars can be awarded to local governments in the form of grants and loans for economic development projects. In addi▯on, funds can be awarded to Cer▯ﬁed Regional Economic Development Corpora▯ons and other eligible economic development organiza▯ons in the form of gran
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