The Commonwealth of Pennsylvania has a tax incentive program for young, for-profit, companies in specific areas in the state. The Keystone Innovation Zone Tax Credit Program offers tax breaks for companies less than eight years old, located in a Keystone Innovation Zone (KIZ) and that are part of a group of targeted industries. These industries include; advanced materials / diversified manufacturing, business services, life sciences or high technology. The aim is to help new companies manage their growth, create jobs and create partnerships between business and higher education.
Pennsylvania Department of Community and Economic Development statistics show that, to date, the program has created over 11,000 jobs and retained over 31,000. Over 7000 businesses have been helped with over $150,000,000 in tax credits (between 2006-2017). They also note that nearly 3,000 patents have been filed and over 800 awarded as a result of this program. It is about more than just the tax credit. If you are a qualifying business in the state this might be an important resource and opportunity for your business.
You can see a map of where the KIZs are located HERE. Detailed application guidelines and qualifications can be found HERE. Applications are due no later than December 1 in a given year. The tax credits are awarded on May 1st of the following year.
Of course the above information is a fraction of what you will need to actually take advantage of the $15 million available to KIZ companies annually. KIZs are near institutions of higher learning all over the state making this tax incentive something to both promote business, higher education and the intersection of the two. There are currently 91 institutions of higher learning participating. There are a lot of examples of educational institutions being major economic drivers. The most obvious may be Silicon Valley but Pittsburgh’s rebirth as a tech and medical center is another.
An eligible company can claim a credit that equals half its gross revenues in the immediately preceding year over the gross revenues for the second preceding year. Both years revenues need to be attributable to activities in the KIZ. The total tax credit in a given year cannot be more than $100,000. This is a simplified explanation of what can be claimed, of course. The guideline link above has more specific information and examples.
One area where businesses that have benefited is Bethlehem, Pennsylvania. Twelve start ups in the area have been awarded over $600,000 in tax credits. The program is statewide but is locally administered. In this case the program is administered by the Bethlehem Economic Development Corporation.
In Lancaster City the program is administered by the Lancaster City Alliance. Four businesses in the city qualified for the credit in the city. These, which include a smartphone-based door key company, received more than $200,000 in tax credits.
As is usually the case when taking advantage of tax credits it is likely talking to an expert would be helpful. Please feel free to reach out to Hito any time.
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