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Various states offer incentives and tax breaks to businesses. Practically every state has something and these breaks are not necessarily related to the COVID-19 pandemic. Many predate it by quite some time. One thing they all seem to have in common is complexity; there are lots of strings attached.

These requirements range from geographic to type of business and they are different program to program and state to state. An instructive example is Colorado, which has a plethora of incentive programs. This example only covers part of Colorado (geography limits benefits right off the bat!). Some of these are statewide while others are focused on the seven county Metro Denver area and two counties in Northern Colorado.

The incentives include (but are not limited to):

Job Growth Tax Incentive

This is an incentive for companies that create jobs. Qualifying businesses receive a state income tax credit equivalent to 50 percent of FICA paid (a U.S. federal payroll tax).

Enterprise Zone Tax Credits

Enterprise Zones exist in many states and cities. They provide incentives to businesses that move to and operate in economically challenged areas.

Manufacturing Sales and Use Tax Exemption

In Colorado, they encourage manufacturers by providing an exemption to state sales and use taxes for the purchase of machine tools, manufacturing equipment and parts used in upkeep of these. Many other states offer similar exemptions (or other incentives).These vary wildly from state to state and even city to city. The details can impact where a company should decide to locate its facilities.

Sales Tax Exemption on Components for Production of Energy from Renewable Energy Sources

If your company uses renewable energy sources Colorado and many other states offer incentives, like sales tax exemption. Each state, or other location, will have different rules and requirements.

In addition to these four possibilities in the Denver Metro Area (plus two Northern counties) there are the Advanced Industry Investment Tax Credit, Strategic Fund Incentive and Job Training Grant Programs. Each of these have complicated requirements and aims.

Keep in mind Colorado is being used here as an example. Different states have different rules and opportunities. There are many options for businesses to save money via government programs all over The USA. These programs also aim to not only help businesses but help distressed communities and foster job growth. These state and local opportunities may impact whether it is viable for a company to move to or stay in a given state. These incentives are also quite elaborate in their requirements. Large corporations can have a team work out a deal specific to their needs but smaller businesses have to work with what is available to all. Hito LLC provides expertise in various tax incentives and can help businesses move through the maze of requirements to take advantage of state incentives and tax breaks.

Contact us at michelle@hitollc.com for a free consultation.