All across the country businesses are engaging in activities that qualify them for state tax credits and incentives, but they may not even know it. Businesses should be mindful of the tax benefits related to their ongoing operations. There are incentives available to businesses that are growing, engaged in specific industries, located in targeted areas, and even expanding or relocating.
Take for example the Indiana Economic Development for a Growing Economy (EDGE) tax credit. Businesses that increase their employment and make investments in Indiana may be eligible to claim the credit if they meet the specific incentive criteria. Many states provide similar incentives for increasing employment.
Industry specific tax credits are meant to promote the growth of a particular industry in a state. A perfect example is a film tax credit. Although nearly two-thirds of the states provide such a credit, the two best known film tax credit programs can be found in California and Louisiana. This shouldn’t be surprising as California is home to Hollywood and Louisiana has become known as Hollywood South. Other examples of common industry specific tax credits can be found in manufacturing and technology related businesses.
Businesses should also be mindful of the tax benefits that may be available for expanding or relocating their operations. From Tesla’s multibillion dollar deal to locate their new facility in Nevada, to GE relocating their headquarters from Connecticut to Boston, large companies receiving massive incentive deals to relocate are nothing new. However, small- and mid-size businesses willing to relocate or expand their operations are often also eligible to claim state tax credits.
Many states provide opportunities to businesses that are creating jobs and making investments within their borders. These programs can be extremely complex, and often times difficult to navigate. However, for those businesses that are eligible, these incentives can provide a boost to help them continue to grow and thrive. If you have questions regarding tax credits for businesses in your state or other complex tax issues, please contact John Dies, Managing Director of Tax Controversy, at [email protected].