The Wall Street Journal estimates that as little as 5 percent of qualified businesses take advantage of the domestic tax breaks they are entitled to--complaining they are either too cumbersome or too confusing. WSJ concludes many business owners don't believe incentives justify the time, effort and expense to qualify for them. Consequently U.S. small businesses are missing out on billions of dollars in tax breaks.
One vital source of capital small and medium-sized businesses are missing out on are state and local business tax credits and government incentives. Jurisdictions across the country offer several business tax credits and government incentives--often underrated and not the main three dozen credits coded by the IRS--to companies in an effort to promote their economic development strategy.
These financial benefits come in the form of grants, tax abatements, income tax credits, interest-free loans, and the list goes on. Eligibility varies, but thresholds to qualify can be low.
Here are a few state programs that may be available to you:
- The Michigan Business Development Program is a cash incentive available to businesses that create as little as 25 new qualified jobs in a rural county or have high-technology activity.
- The Tennessee Job Tax Credit awards businesses that create as low as 10 new jobs, so long as it pays the state's average occupational wage and is located in a census tract where the poverty rate exceeds 30%.
- The Colorado Job Growth Incentive Tax Credit provides a state income tax credit to businesses that create at least 20 new jobs with an average yearly wage of at least 100% of the county average. Businesses located in an Enhanced Rural Enterprise Zone need only to create 5 jobs to be eligible.
State and local business tax credits and government incentives are an essential source of funding that offer significant savings. Securing them reduces your tax burden, manages costs more effectively, and improves earnings. Go check out the incentives available in your current or expansion city or state. You do not want to miss out on this vital source of capital.