| Program |
Description |
Target Audiences |
Availability |
| Wage Credits |
Empowerment Zone Employment Credit
Credit against Federal taxes up to $3,000, for businesses for each year of EZ designation, for every existing employee and new hire who live and work in the EZ.
Use the Wage Credit calculator to estimate your savings.
|
Businesses relocating to a Zone that will have large hiring needs,
Businesses expanding within the Zone that will be hiring new
employees,
Businesses with relatively high turnover that often need new employees,
Businesses with a stable workforce of employees living in the Zone, and
Businesses seeking to qualify as an Enterprise Zone Business that must meet the 35% Zone resident employee requirement.
|
Available for Round II EZs after December 31, 2001, cannot count wages for both the Work Opportunities Tax Credit and Welfare to Work credits and the EZ Wage Credit. |
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| Deductions |
Accelerated Depreciation
Increased Sec. 179
Allows businesses to claim increased Section 179 deduction if it qualifies as an Enterprise Zone (EZ) Business or Renewal Community Business (RC). Can be claimed on certain depreciable property such as equipment and machinery.
Use the Depreciation Calculator to estimate your savings. |
Businesses with $200,000.00 equipment needs in any taxable year, such as labor-intensive businesses with computer costs,
Existing businesses that need to update equipment but are not otherwise purchasing equipment, and
Businesses moving into a Zone from another location that own the majority of their equipment but have additional new equipment needs.
|
Can be used only in Empowerment Zone; cannot be used in developable sites or Enterprise Communities. |
Environmental Cleanup
(Federal Brownfields)
Businesses can elect to deduct qualified cleanup costs of hazardous substances in certain areas in the tax year the business pays or incurs the costs. |
Prospective purchasers of contaminated property who are willing to pay the cost of cleanup rather than having the seller pay,
Businesses with sufficient income to be able to use the full deduction
of cleanup costs in the year expenditures are paid or incurred,
Current owners of contaminated property who may wish to expand
or improve property, and
Businesses interested in developable sites.
|
Empowerment Zones, including
developable sites and targeted areas;
need certification cost deduction of State environmental agency; includes costs
paid or incurred prior to January 1, 2004. |
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| Capital Gains |
Non-recognition of Gain on Sale of EZ Assets (EZA)
Capital gain on EZAs (stock, partnership interests, and business property) of an Enterprise Zone Business held for more than 1 year is not recognized (and is rolled over) if replacement EZA is acquired
within 60 days.
| Businesses in Empowerment Zones (EZs) that frequently replace property used by the business with similar property,
Investors interested in holding stock or partnership interests in an Enterprise Zone Business for a short term, and
Businesses interested in locating in an EZ and postponing gain on investments for tax planning purposes.
|
Election by taxpayer for EZA acquired after December 31, 2000, and before January 1, 2010, for all EZs. |
Partial Exclusion of Gain on Sale
of EZ Stock
Exclusion of 60% of the gain on sale of small business stock of a Corporation that is an Enterprise Zone Business located in an EZ if the stock is held for at least 5 years.
Use the Capital Gain calculator to calculate your savings with and without the exclusion. |
Small corporations starting up or seeking additional cash infusion that locate in EZs,
Startup corporations that expect rapid appreciation in the value of their stock,
Investment banking firms that specialize in selling stock of emerging,
small corporations,
Local investment clubs seeking to invest in small businesses in an EZ, and
Taxpayers with stock portfolios looking to reduce capital gain.
|
Stock must be acquired after December 31, 2000 and before January 1, 2010 at original issuance in exchange for cash. Sixty percent exclusion does not apply to gain after December 31, 2014. Business must be an EZ business in an EZ. |
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| Bond Financing |
Enterprise Zone Facility Bonds
State and local governments can issue Enterprise Zone Facility Bonds to make loans at lower interest rates to EZ businesses to finance Qualified Zone Property. |
Zone businesses with a capital project of at least $2 million with
a good credit rating or a letter of credit bank,
Large national businesses setting up branch stores or operations
in Zones, and
Local banks that may be interests in lower cost capital to lend to
qualifying businesses.
|
$20 million per borrower nationwide. $130 million available in urban Round II EZs and developable sites over 10 years for Zone-based commercial, retail, or industrial property. 35% of employees must be Zone residents. Does not count toward state cap. |
Qualified Zone Academy Bonds
State and local governments can issue bonds at 0% interest to finance public school programs with private business partnerships. Businesses must contribute money, equipment or services equal to 10% of bond proceeds. The Federal Government pays interest in the form of tax credit to banks, and insurance and
certain financial corporations that hold bonds.
|
Banks, insurance companies or corporations in the business of lending money that are eligible to receive tax credits as holders of bonds,
Local businesses with specific employee skill sets that could be taught at the secondary school level,
Businesses interested in providing mentorship or internship
opportunities to secondary school students, and
School districts seeking to upgrade schools in EZ or EC.
|
Private businesses receive charitable deductions for contributions. Can be used in Zone for materials, teacher training, rehabilitation or equipment for programs that prepare students for jobs. Schools must be in Zone or have 35% of students eligible for free or reduced lunch. Credit allocated by State education agency. |
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