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 for each newly created job.  Credits cannot be sold or transferred, however unused credits may be carried forward for 5 years.

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):  Businesses that make significant capital investments and commit to creating and/or retaining at least 100 jobs may be entitled to grants, loans, or loan guarantees offered under this discretionary program.  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 or 50% of eligible Land and Building Costs, whichever is less. Eligible businesses (except service enterprises and developers) may be eligible for a maximum loan of $1,500,000 to finance Machinery and Equipment 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 is $200,000 for environmental assessments and $1 million for remediation projects. 

Last Updated: April 2017


 
BIGGINS LACY SHAPIRO & COMPANY
 
PRINCETON
47 Hulfish Street, Suite 320
Princeton, NJ 08542
(609) 924-9775
NEW YORK
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(646) 652-7555
CHICAGO
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Chicago, IL 60606
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CALIFORNIA
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