Massachusetts 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 Massachusetts, and their state economic development professionals gave us some details ( ecdev site click here).
Massachusetts offers a selection of credits and incentives for new and existing businesses, mainly geared toward larger projects.  CNBC ranked Massachusetts #20 in their 2015 America’s Top States for Business survey (Georgia was #5 in the same survey).    
Incentives and Credits include:
The Economic Development Incentive Program (EDIP) — Includes the categories of Certified Expansion Project (EP), Enhanced Expansion Project (EEP), and Manufacturing Retention Project (MRP).  Involves up to a 10% EDIP- Investment Tax Credit (ITC) and local incentives.  Massively complex process, and   pre-approval is always required, of course.

Job Creation Incentive Program — Qualifying biotechnology and medical device manufacturing companies are eligible to receive incentive payments for new job creation.  Create 10 or more eligible jobs in the Commonwealth during a single calendar year.

Other Tax Credits — Credits for Investment (manufacturing, research, some others), Research and Development (similar to other states), and other special and assorted incentive programs.

Compared to Georgia, Massachusetts has:
  • Much higher corporate and higher personal income tax rates.
  • Higher combined state and local tax burden
  • A narrower range of incentives.
  • Pre-approval required for all incentives
To summarize, Massachusetts is below average for business tax incentives,but they do enjoy a prime Northeast location.


Florida Credits and Incentives

As we mentioned last month, 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 Florida. I spoke with Tim Johns of Enterprise Florida and learned some of their details (eflorida site click here).

Florida’s main tax credits and incentives focus on creating new high wage jobs in targeted high value-added industries.  The Qualified Target Industry Tax Refund (QTI) includes refunds on corporate income, sales, ad valorem, intangible personal property, insurance premium, and other taxes. Pre-approval is required for all of Florida’s primary incentives.  Florida’s credits and incentives are not as complicated as many states and are generally straightforward.

Other incentives and grants for capital investments and new jobs are available for large projects ($25 million+).  Local incentives can include property tax exemptions and local sales tax exemptions.  Florida targeted industries include manufacturing, R&D, infotech, cleantech, life sciences, aviation/aerospace, defense, financial & professional services, headquarters facilities, and others.

The main difference between Florida and most other states is that for pass-through entities such as S-corporations, LLPs and LLCs, there is no state income tax!   

Compared to Georgia, Florida has:

  • Different corporate taxes:  Slightly lower corporate income tax rates for C-corporations.  No corporate income tax for pass-through entities.  No taxes on capital stock, business inventories, or manufacturing equipment.  No personal state income taxes.  High property taxes!
  • broader range of industries eligible for C-corp credits, a far narrower range for training incentives, and a much broader range of companies not needing income tax credits.
  • A similar straightforward approach when planning company qualifying activities.
  • Almost no opportunities for incentives unless pre-approved.

To summarize, Florida is very competitive for new and expanding businesses.  Representatives at the state and local level are eager to help – the state economic developers respond to inquiries almost immediately!

Do any of your clients have Florida connections?  Make sure you review their potential qualifying activities early to maximize their $$ benefits!!


Alternative Funding for Your Clients

We recently attended The Georgia Financing Roundtable conference sponsored by the Council of Development Finance Agencies (CDFA, click here). This session highlighted federal, state, local, and private alternative financing tools available to economic development groups to assist companies with job growth. These alternatives include bonds, grants, tax credits, EB-5 financing and equity funding sources. There are a lot of alternatives available, especially for economically distressed and rural areas. Here is an overview:

  • Invest Atlanta – Major push for downtown Atlanta for assisting start-ups, strengthening exports, and increasing foreign direct investments.
  • Georgia – The Department of Community Affairs (DCA) provides grants and Industrial Development Bonds as well as providing guidelines for Job and Opportunity Zone tax credits (click here for DCA overview). Also, the 2014 legislature will consider the proposed Downtown Renaissance Tax Credits to redevelop downtown areas (HB 128 click here)
  • Federal – Due to the budget, sequester, and other issues, federal incentives may be reduced over time. However, several programs are still available including new market tax credits, EB-5 program, and USDA rural development programs.
  • Summary – Alternative financing tools are utilized less than 5% of the time in local economic development efforts. But creative financing could be utilized a lot more to obtain funds for economic development. For example, a new economic development project may be financed with “Capital Stacking.” This approach may combine tax exempt bonds, EB-5 equity, and tax credits to finance a new project.

So reach out to your economic development organizations to find alternative funding for your clients.  You can help to spur local job growth, benefiting your clients and your community!



Hidden Local $ Incentives

We were recently helping a client do research on the Opportunity Zone tax credit (for details click here).

As we dug into the details to see what was available,  we saw some other incentives for less developed areas that looked interesting.

Enterprise Zones — The local (city or county) government may reduce property taxes, local sales taxes, business licenses and other fees (click here).  For example, the City of Tifton offers both Opportunity Zone and Enterprise Zone incentives (click here).

Urban Redevelopment — The local government may have plans to improve streets and utilities, acquire buildings & land, and rehabilitate areas (click here). For example, the City of Union City has extensive improvement plans (click here).

Make sure your clients talk with their local economic development representatives before they add employees, buy land, expand buildings, or make other improvements. There may be some hidden but well-deserved $ assistance available.