With the pandemic causing state governments to address more pressing public health and budgetary needs, we anticipate most new incentive programs to be delayed. However, as BLS & Co. continues to closely monitor incentive law changes, we’re finding that some states – including Georgia, Idaho, Delaware and Pennsylvania -- are successfully advancing new legislation intended to spur economic activity.
Here's a full breakdown on those incentive updates.
On June 30, 2020, Governor Brian Kemp signed into law House Bill 846 which allows for manufacturers of personal protective equipment (PPE) which create new jobs in the state to claim a $1,250 per new job. Like the Job Tax Credit, the PPE credit is can be claimed for a period of five years per new jobs. The PPE credit is available beginning January 1, 2020 and is scheduled to sunset December 31, 2024. While the credit is non-refundable, any PPE credits in excess of the company’s state corporate income tax liability may be applied against state employee payroll withholding obligations allowing the company to fully monetize the value of the tax credit.
Eligible PPE manufactures include companies producing protective clothing, helmets, gloves, face shields, goggles, facemasks, hand sanitizer, and respirators or other equipment designed to protect the wearer from injury or to prevent the spread of infection, disease, virus, or other illness.
The PPE tax credit acts as a bonus on the state’s existing Job Tax Credit which is awarded to businesses that create net new full-time jobs may be eligible for an annual corporate income tax credit of $750 to $4,000 per job. To qualify, the Georgia facility must be engaged in a specified operation, or the headquarters of a company engaged in a specified industry, including manufacturing, warehousing, distribution, logistics, software development, contact centers, and others. The exact value of the as-of-right tax credits will depend on job creation and the development tier of the county or census tract where the project is located. Job Tax Credits are non-refundable and non-transferable and are claimed each year for five years. In certain counties, credits can be applied to payroll withholding, once corporate income tax liability is exhausted. Unused credits may be carried forward for up to 10 years. A company may claim either but not both a job tax credit and investment tax credit.
Also included in House Bill 846 is added flexibility for employers currently claiming the Quality Jobs Tax Credit. New changes as part of the will allow employers to use the number of full-time employees they claimed in 2019 in the 2020 and 2021 tax years. This flexibility was added for employers who are impacted by COVID-19.
On March 30, 2020, Governor Brad Little signed into law House Bill 521 which created new sales tax exemptions for data centers in the state. Beginning July 1, 2020, qualifying data centers locating in Idaho will be eligible for a state sales tax exemption on server equipment and building construction materials. To qualify for the tax exemption, companies must (1) create and maintain at least 30 new jobs in Idaho within the first two years, paying an average wage that is at or above the county average, and (2) make a capital investment of at least $250,000,000 within 5 years after construction begins.
Idaho joins both Illinois and Indiana which enacted similar data center sales tax exemptions in 2019. Illinois announced a $800 million data center investment from Facebook in DeKalb in June. Over 30 states across the US now have enacted data center-targeted tax incentives. Because of their large capital investments, high utility usage, and smaller labor requirements, data center location decisions are particularly sensitive to the tax treatment of server equipment and energy purchases.
In June, Transportation Infrastructure Investment Fund (TIIF) Council announced its first ever round of funding for the newly enacted TIIF program to eight projects across Delaware. The TIIF program, enacted in 2019, provides grant funding for road and transportation infrastructure improvements in order to attract new businesses to this state or expand existing businesses. The eight projects which received awards average $1.1 million in funding and are expected to create more than 1,300 new jobs.
At the end of June, the Pennsylvania General Assembly passed Senate Bill 352 which gives local taxing authorities the option to designate deteriorated areas within their communities and offer tax abatements to developers and property owners who are approved to rebuild or improve the blighted property. Under the bill, properties must fulfill specific requirements, such as being a “blighted property,” correcting all code violations, conforming to zoning requirements and increasing the property value by at least twenty-five percent. The bill also specifies that properties already receiving certain types of tax exemptions or reductions are not be eligible for the tax abatement.
The tax abatement would apply to new taxes created as a result of the developer or property owner’s investment. The tax abatement term is up to ten years with the abatement percentages decreasing by 5 percent to 15 percent annually.