Incentives

Payroll Tax Credit

Act 182 of 2003 § 15-4-2709

The payroll income tax credit for targeted businesses is offered to assist with the start-up of businesses in targeted sectors that pay significantly more than the state or county average wage of the county in which the business locates. This incentive is offered only at the discretion of the Director. In order to qualify for this incentive, the business must be included in one of six targeted business sectors as defined above.

The benefit for a qualifying targeted business is a 10% income tax credit based on its annual payroll, with a cap of $100,000 per year in earned income tax credits for a business that qualifies and is approved for this incentive. The incentive may be offered for a period not to exceed five years. The five-year period begins on the date the financial incentive agreement is signed and may not extend beyond 60 months from that date. Unlike the other incentives, this targeted payroll income tax credit may include existing employees in the calculation of payroll to qualify for this benefit.

A unique feature of this incentive is the ability of the business that earns the targeted business income tax credit to sell the credits. The business must make application to the commission for the sale of credits earned under this section within one year of issuance. Upon approval by the commission, the business may sell earned income tax credits within one year of issuance. The commission may assist the business in finding a buyer for the tax credits.

Since one of the allowable costs under the research and development tax credits (discussed below) is the salary of a person performing research, a business earning job creation income tax credits for targeted businesses is prohibited from earning research and development tax credits, as authorized by § 15-4-2708 or by § 26-51-1102(b) for the same expenditure.