"Credits and Incentives” are the enticements offered by states, counties and municipalities to attract private enterprise to bring, expand or maintain business within their borders.
“Credits” refers to income tax credits—these programs are often formalized in structured programs. Credits come in two forms: 1) As Right and 2) Negotiated. As Right credits are available to all companies that satisfy particular requirements. Negotiated credits are, obviously, negotiated with the economic development agencies in charge of the program’s administration.
“Incentives” is the catchall term for the other offerings. These may include property tax abatements, sales tax exemptions, training grants, low-interest or government backed financing, land grants, and reimbursements of development costs. Formal program and application processes govern some incentives; others are negotiated on a case-by-case basis.
Relationships are key to the successful negotiation and reward of various Credits and Incentives. Most programs require lengthy negotiation processes to receive the incentive and detailed reporting and compliance requirements after the incentive’s award. Without good working relationships with incentive administrators, these processes can be difficult to navigate.
If you have additional questions regarding Credits and Incentives, please email Tax Candi.