Tax Credits

Jobs Incentive Credit: The Rhode Island Qualified Jobs Incentive Act of 2015 offers tax credits for up to 10 years to businesses that create new jobs.  The amount of credit awarded to a business is roughly equivalent to the W-2 withholdings received by the State for each new full-time job created.  The job creation threshold to qualify for the program will depend on whether a business is in a targeted industry and the number of existing, full-time employees.  Annual credits range from $2,500 per job to $7,500 per job, but are capped by actual W-2 withholdings.  Unused credits can be carried forward for up to 4 years.  Tax credits can also be sold, transferred, or redeemable with the State for 90% of value.

Rebuild Rhode Island Tax Credit: Program is intended to encourage commercial development and redevelopment. The maximum credit is the lesser of:

  • 20% (or sometimes 30%, depending on project characteristics) of total project cost, or
  • Amount needed to close a demonstrable project financing gap (after taking into account all other private and public funding sources available to the project)

The maximum credit awarded to any project cannot exceed $15 million. Tax credit is paid out over a period of five (5) years.  Unused tax credits can be carried forward for up to four (4) years.  Credits are also salable, transferable, or redeemable with the State for 90% of value. Projects that are eligible for the Rebuild Rhode Island Tax Credit, may at the discretion of the Commerce Corporation, be exempt from Sales and Use taxes imposed on the purchase of furniture, fixtures and equipment.

Anchor Institution Tax Credit:  This program was established to attract businesses to locate in Rhode Island and to give existing Rhode Island companies an incentive to encourage businesses in their supply chain, service providers, or customers to relocate to the Ocean State. 

A business is eligible to claim a credit if it has played a substantial role in the decision of a qualified business to relocate a minimum number of jobs as provided below:

  • Relocation of 10 jobs from 2015-2018;
  • Relocation of 25 jobs from 2019-2020

The number of jobs created, wages, industry sector, and location of the project (e.g. in a “Hope Community) will determine the amount of the credit.  Tax credits can be claimed for five (5) years.

GRANTS AND LOW-INTEREST FINANCING

First Wave Closing Fund: Discretionary program provides gap financing in the form of a loan or conditional grant to support economic development projects that result in the creation and retention of jobs.  The State will consider the following factors when evaluating applications:

  • Economic impact of the project, including costs and benefits to the state;
  • Amount of the project financing gap;
  • Strategic importance of the project to the state, region, or locality;
  • Quality and number of jobs produced;
  • Quality of industry and project; and
  • Competitive offers regarding the project from another state or country

Program funds may be used by a qualified business to cover working capital, equipment, furnishings, and fixtures; construction, rehabilitation, or purchase of real property; and permanent financing.

Industry Cluster Grants: Competitive grants are administered by the Commerce Corporation to start, grow, or improve industry sector partnerships, encouraging companies to work together to solve problems, exchange technology and share talent.

Competitive Startup and Technical Assistance Grants: Available in amounts between $75,000 and $250,000. These grants can be used to support activities within the industry cluster that enable collaboration among businesses and other institutions to advance innovation and increase sector profitability. Eligible organizations may be regional or statewide in scope and may include, but not solely be composed of, relevant companies or institutions outside of Rhode Island.

Competitive Program Grants: Available in amounts between $100,000 and $500,000.  These program grants are available to businesses that enhance cluster growth and effectiveness.

Special Zoning

Tax Increment Financing (TIF) Program: Rhode Island’s tax-increment financing program allows developers to retain up to 75% of the incremental state tax revenues generated by or around their projects within a designated TIF area.  Payments to a qualified developer cannot exceed 30% of total project costs. 

I-195 Redevelopment Project Fund: The State has allocated $25 million in funds for FY2016 to support the redevelopment of surplus land along the I-195 corridor in the City of Providence.  Funds can be used to help cover capital expenditures, land acquisition costs, public infrastructure, and project financing gaps for real estate development projects involving private businesses and anchor institutions.

Training Programs

Job Training Tax Credit - Apprenticeships: Provides companies with a tax credit equal to 50% of eligible training expenditures for new or existing employees. Employees must be full-time and earn at least 150% of the RI minimum wage.  Training plans must be filed with the Rhode Island Human Resources Investment Council for prior written approval.  The credit is capped at $5,000 per employee over a 3-year period.

Job Training Grants: The Governor’s Workforce Board Rhode Island offers a training program for business and industry funded through a job development assessment fee that is applied to taxable payroll. This pool of money is available for companies to create customized training programs tailored specifically for a business and free from restrictions imposed by federally-funded programs.

TAX EXEMPTIONS AND REDUCTIONS

Sales and Use Tax Exemptions: Machinery and equipment used in an industrial plant is exempt from sales tax as is scientific equipment, computers, and software used for R&D.

Tax Stabilization Incentive: TSAs (Tax Stabilization Agreements) are available that reduce the tax rate on a project for a set number of years; qualifying business development projects must create at least 50 new full-time jobs and spend at least $10 million. If the project is located in a designated hope community, the number of jobs is reduced to 25 and capital investment is reduced to $5 million.

Last updated: April 2017


 
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