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What to Know About State Tax Incentives

Nov 10, 2023

Nearly every organization that is moving locations, investing, growing, or training their employees can benefit from tax incentives at the state level. Incentives can take the form of tax credits, low-cost or forgivable loans, or grants for companies to expand or invest. Each state offers different options, but there are a few common factors to look out for.

What are state tax incentives? 

Broadly speaking, there are two types of incentive programs that a state can offer: 

  • Tax incentive programs: Incentive and franchise, property, sales and use, and payroll
  • Non-tax incentive programs: Grants or forgivable loans, training, infrastructure, utilities. 

How does your organization know if you may qualify for a tax incentive? 

Taking advantage of these programs requires a great deal of planning and research. There are five factors to take into consideration for state tax incentives: 

  1. The number of jobs that were created.
  2. Compensation of the jobs being created.
  3. Investment in property plant and equipment.
  4. Location of the intended project.
  5. Industry sector and type of business operations. 

As a business decides to enter a new market, end-user incentives are potentially beneficial for projects meeting job, investment and “material factor” thresholds. 

Each state has different programs and incentives. It’s important to note that patience is key when working with incentive programs and some states are easier to work with then others. 

When deciding to either move your business or open a new location, it’s key to do your diligence before selecting a new location, and critical to discuss your business needs with your trusted advisor and investigate programs that might be available. 

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Timothy Schuster

Mr. Schuster is a Senior Manager providing tax compliance services to individual filers, as well as assistance on tax returns for companies in the manufacturing and real estate industries.

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