The federal government, as well as states, use tax credits, deductions and incentives to encourage investment, boost employment and stimulate innovation. No matter if your company is new, growing or well established there are a variety of tax credits and incentives available that you may be eligible for. Understanding whether your business is a candidate for such programs can be confusing – quantifying the benefits, determining how to apply and complying with these programs are just some of the challenges.
There are two categories of incentives, statutory and discretionary. Statutory incentives are typically available as of right (available to any company meeting the definition of a qualified company and performing qualified activity) but may still require an application or pre-approval. Discretionary incentives typically involve a “but-for” requirement (but for the receipt of incentives the project will not move forward). Public authorities have the discretion to approve or deny and the amount of the benefits is variable based on a number of factors.
Statutory benefits
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- Capital investment incentives
- Job creation or point-of-hire credits
- Research and development enticements
- Location-based benefits
- Activity-based credits
Discretionary incentives
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- Cash grants for infrastructure or training
- State owned infrastructure
- Real estate tax abatements
Some common Federal credits include the recently renewed Work Opportunity Tax Credit, expanded Research and Development Tax Credit, Historic Preservation tax credit and Renewable Energy credits.
In New York State incentives are targeted at new businesses, employers and manufacturers. Companies involved in agriculture, research and development and the entertainment industry are also often beneficiaries. Programs include the highly publicized Start-Up NY, Excelsior Jobs Program for firms in targeted industries and more well-known perks such as sales tax exemptions and investment tax credits.
Additional benefits are available from sources other than the state, such as real estate and mortgage recording tax abatements, low cost financing or sales tax exemptions through the local industrial development agencies. Some utility providers also have their own economic development programs offering reduced rates or grants for infrastructure. If your business in hiring, buying new equipment or investing in training be sure you’re not leaving money on the table.
If you have any questions about potential opportunities for tax credits and incentives, please email Alicia Sears at asears@tsacpa.com. For additional State and Local Tax insights and resources, or to subscribe to our quarterly newsletter, visit tsacpa.com.
