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Tax Credits, Grants and Abatements for Expansion and Relocation of Office Space or Manufacturing Facility   

Company expansion often involves strategic decisions about where to establish or grow business operations. State and local governments recognize the economic impact of such expansions and offer various incentives to attract or retain companies. Let’s delve into the tax credits, grants, and other incentives that businesses can leverage:

  1. Tax Credits:

    • Job Creation Tax Credits: These credits reward companies for creating new jobs. The incentive amount varies by location and industry. To qualify, companies typically need to demonstrate a minimum net job increase and maintain those jobs.  Below are just a few examples of states that have programs for growing companies:  (Most states have similar programs.)

      • Alabama: The Alabama Job Act provides a cash refund of up to 4% of the previous year’s gross payroll for new jobs over a 10-year period.

      • Arizona:  Arizona has several programs that require job creation and capital investment.  Arizona’s programs also vary depending on industry such as manufacturing, healthcare, HQ, technical and other factors.

      • Georgia and South Carolina: Both states offer similar job credit programs over a five-year period. The credit amount depends on the company’s location and can be used against income tax or payroll withholding tax.

      • Kentucky: The Kentucky Business Investment Program provides wage assessments of up to 4.5% taxable wages for up to 15 years.

      • Mississippi: Mississippi offers a job credit of up to 10% of the new payroll for a five-year period.

    • Investment Tax Credits: These credits encourage capital investment. Companies receive tax credits based on their qualified investments in property, equipment, or facilities.  Below are states with investment tax credit programs.  As referenced above, most states have similar programs, which my team can research.

      • Virginia: The Virginia Jobs Investment Program provides investment tax credits for qualified capital investments.

      • Ohio: Ohio offers an Investment Tax Credit for eligible projects.

    • Research and Development (R&D) Tax Credits: Some states provide R&D credits to incentivize innovation and technological advancement.  As an example, the state of Arizona will provide up to $100,000 annually to a company that innovates.  Typically, tech, manufacturing, architects, healthcare, and other industries.

  2. Cash Grants and Rebates:

    • Discretionary Incentives: These include cash grants, property tax abatements, sales tax refunds, and utility reductions. States and cities use these incentives to spur economic growth.

      • Below are a few states with discretionary programs.  (Many states have similar programs; however, must be negotiated prior to hiring.)

      • North Carolina: The Job Development Investment Grant (JDIG) program offers performance-based grants.

      • Georgia: The Georgia Retraining Tax Credit assists companies in retraining existing employees.

  3. Property Tax Abatements:

    • Companies may receive property tax relief for a specified period when they invest in new facilities or expand existing ones.

  4. Sales Tax Exemptions:

    • Businesses expanding in certain industries (e.g., manufacturing, data centers) may qualify for sales tax exemptions on equipment purchases.

  5. Utility Rate Reductions:

    • Some states negotiate reduced utility rates for companies that create jobs or invest in energy-efficient technologies.

  6. Enterprise Zones and Opportunity Zones:

    • These designated areas offer tax incentives to encourage investment and job creation.

Remember that the availability and specifics of these incentives vary by state and locality.  By leveraging these incentives, businesses can make informed decisions about their expansion plans and contribute to local economies.

 

Please reach out to Bryant Colman, Managing Principal of EIAG about your company’s expansion plans.  Ideally, the process can start at least six months prior to your expansion.

bcolman@eiag.com