Category: R&D Tax Credits

Tax Credits Can Lead to Other Incentives

Many times a known tax credit can lead you to find more incentives for your client! These could include additional income tax credits, payroll tax credits, sales tax exemptions, property tax abatements, and non-tax cost reductions. For example, a manufacturing company utilized Federal and Georgia R&D tax credits for a new manufacturing process. This new manufacturing process will be moved from the client’s research area to their manufacturing area. Incentive activities for this move can potentially include:
  • Assets purchased (i.e., land, buildings and equipment): Georgia Investment Tax Credit, cost segregation study, Section 179, federal and state energy incentives, Georgia sales tax exemption for supplies/energy, and other incentives
  • New employees hired: Georgia Job Tax Credit and Federal Work Opportunity Tax Credit.
  • Existing employees trained: Georgia Retraining Tax Credit.
  • If this move includes a major expansion or new location: other state and local incentives may be available.
  • Other incentives: Some locations have non-tax related incentives such as the Tennessee Valley Authority for electric power cost reduction for employee head count increases (click here).

So remember — if your client is utilizing a tax credit, ask more questions to flesh out the details of the activities related to the tax credit.  And these activities can lead to more incentives today and tomorrow.


Minnesota Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Minnesota, and their state economic development professionals gave us some details ( incentives site click here).
Minnesota offers a good selection of credits and incentives for new and existing businesses.  CNBC ranked Minnesota #4 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). Rating heavily skewed by quality of life and education points!    
Incentives and Credits include:
Angel Tax Credit — Small businesses engaged in the research or development of qualifying high-technology can qualify for up to $1 million in credits.

Greater Minnesota Business Expansion Tax Credits — Sales tax exemptions of up to 12 years for specified job creation and wage levels.

Research and Development Tax Credit — 10% up to the first $2 million in eligible expenses, 2.5% above $2 million.

Border Cities Enterprise Zones — provides property tax credits, debt financing credit on new construction, sales tax credit on construction equipment and materials, and new or existing employee credits to qualifying businesses in the border cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville.

SEED Capital Investment Program — tax incentives for innovative businesses located in the Minnesota border cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville. Investors may receive a 45 percent tax credit on their investment, up to $112,500 per year.

Other Incentives — Emphasis local tax abatement and other financing programs depending on the project.

Compared to Georgia, Minnesota has:
  • Much higher corporate and higher personal income tax rates.
  • Higher combined state and local tax burden
  • A wider range of incentives.
  • Pre-approval required for most incentives
To summarize, Minnesota is above average for business tax incentives in a good Midwestern location.  And don’t forget that “quality of life,” whatever that means!