Biggins Lacy Shapiro & Company, LLC

Pennsylvania Economic Development Incentive Programs

Tax Credits

Job Creation Tax Credit (JCTC):  This program provides a non-refundable corporate income tax credit to businesses that create at least 25 new jobs or expand existing employment by 20%.  The credit is equal to $1,000 per year for 3 years for each newly created job. Credits cannot be sold or transferred, however unused credits may be carried forward for 5 years.

Manufacturing Tax Credit (MTC):  Program provides tax credits to taxpayers who increase their annual taxable payroll by $1,000,000 through the creation of new full-time jobs. Tax credit awards shall be equal to 5% of the taxpayers increase in annual taxable payroll, if increased by at least $1,000,000 above a pre-determined base year amount.

Research and Development Tax Credit:  Offers a non-refundable tax credit equal to 10% of a company’s R&D expenses over a base period. The credits are assignable, and may be carried forward for up to 15 years. 

TAX EXEMPTIONS:

Local Economic Revitalization Tax Assistance (LERTA): This program allows local taxing authorities to provide real property tax exemptions for projects that involve new construction or result in improvements made to industrial, commercial, or other business property.  The exemptions apply to the assessed value of new construction and the assessed value of improvements made to an existing building. Eligible projects must be located in an area designated as a Local Economic Revitalization Assistance zone.  To receive the 10-year exemption, approval is required from all local taxing authorities, including the school district.

In addition to LERTA, Pennsylvania permits local taxing jurisdictions to use tax increment financing (TIF) to spur redevelopment projects in blighted areas.  

SPECIAL ZONING:

Keystone Opportunity Zone (KOZ):  Businesses that locate in a KOZ are eligible for credits, waivers and broad-based exemptions on state and local taxes until the zone’s expiration date (zones have varying expiration dates). The effective tax burden for a company may be reduced to zero.  To qualify for the full range of KOZ benefits, existing businesses that relocate from a non-KOZ Pennsylvania location to a KOZ must increase full-time employment by 20% within the first full year of operation or make a capital investment equal to 10% of gross revenues from the previous fiscal year that were attributable to the business operation(s) that will be relocating to the KOZ.  

GRANT AND FINANCING PROGRAMS:

Pennsylvania First Program (PA First):  The program offers an upfront grants, loans or loan guarantees for large-scale competitive “targeted industry” projects that involve significant job growth and capital investment. Program funds may be used to offset costs associated with building improvements, capital expenditures, environmental assessments, and land acquisition.  In addition to businesses, applicants for PA First funds may also include municipalities, redevelopment authorities, and local development districts.  The maximum amount of assistance is capped at $5,000 per job.

Pennsylvania Industrial Development Authority (PIDA) Loan: Businesses that commit to creating or retaining jobs may qualify for low-interest loans to help finance eligible project expenditures including Land and Building Costs as well as Machinery and Equipment Costs.  The maximum available loan for Land and Building Costs is $2.25 million (capped at certain percent of eligible Land and Building Costs). Certain eligible businesses may also be eligible for Machinery and Equipment loan of up to $1,500,000, capped at 50% of total eligible M&E costs.   

Industrial Sites Reuse Program (ISRP): Provides grants and low-interest loan financing to perform environmental site assessment and remediation work at former industrial sites. The maximum grant or loan for any assessment project cannot exceed 75% of the total cost of the assessment, or $200,000, whichever is less, in a single fiscal year. The maximum amount to be awarded for any remediation project cannot exceed 75% of the total cost of remediation, or $1 million for grant recipients, whichever is less, in a single fiscal year. Remediation loans may exceed $1 million based on the substantiated need for low-interest financing to maintain the validity of the remediation project. 

Redevelopment Assistance Capital Program (RACP): A discretionary program designed for competitive projects generating substantial economic impact.  Obtaining the funds is complex as it requires itemization – i.e., projects seeking an award must be included in the Capital Budget Project Itemization Acts passed by the General Assembly and signed into law by the Governor.

TAX INCENTIVES

Qualified Manufacturing Innovation & Reinvestment Deduction: Qualified businesses are eligible to deduct 5% of their private capital investment from their corporate net income tax liability if they invest more than $100 million in the creation of new or refurbished manufacturing capacity. Deduction is available annually for a period of 5 years.

Computer Data Center Equipment Incentive Program:  The program provides a tax refund for sales and use tax paid on qualified computer data center equipment utilized within a facility certified by the Department of Revenue for participation in the program. The total amount of refunds available from the program each fiscal year is $5 million. If the total amount of tax refunds approved for all applicants in a fiscal year exceeds this amount, the Department shall allocate the refund to be received by each applicant.

Last updated: June 2018



 
Biggins Lacy Shapiro & Company, LLC
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