Federal Location Based Tax Credits

Empowerment Zone

National Tax Credit Group, LLCAn Empowerment zone (EZ) is an area determined by the government to be economically distressed. The establishment of EZs is aimed at increasing commercial activity, job opportunities as well as promoting regional vitality in an effort to revitalize these economically distressed areas. An eligible employee living in the same EZ as their employer can qualify his/her employer for a federal tax credit of up to $3,000.

Renewal Community

A Renewal Community (RC) is also an economically distressed area designated by the government. Businesses located in RCs can qualify for specialized income tax savings from the federal government. The government provides these levies as an initiative to encourage job development and stability, which in turn boosts the overall local economy. An eligible employee living in the same RC as the business can qualify his/her employer for a federal tax credit of up to $1,500.

WOTC and Welfare-to-Work

The Work Opportunity Tax Credit (WOTC) is a tax credit made available to businesses that employ individuals from groups who have experienced consistently high unemployment rates due to a variety of employment barriers. WOTC is a federal program to assist job seekers in gaining employment / work experience. An eligible new hire can qualify his/her employer for a federal tax credit of up to $2,400.

Go Zone

National Tax Credit Group, LLC The Gulf Opportunity Zone (GO Zone) Act, also known as the “Core Disaster area,” was established in 2005 to offer tax incentives and bond provisions as an effort to rebuild local and regional economies affected by Hurricane Katrina and Rita. Employers may claim WOTC if they hire a new qualified employee after August 27, 2005 for a job located in the core disaster area or was displaced by Hurricane Katrina and is hired after August 27, 2005 but before December 31, 2005 for a job located outside the core disaster area. New eligible hires can qualify their employers for a federal tax credit of up to $2,400.

Updates: After Hurricane Katrina devastated the Gulf Coast, Congress passed a package of tax incentives in 2008 to help individuals and businesses recover. One provision enhanced the Work Opportunity Tax Credit for Hurricane Katrina-affected employers. The new law extends this provision through 2009. Another Katrina-related incentive, the increased rehabilitation credit for structures in the Gulf Opportunity Zone, is also extended through 2009.

Midwestern Disaster Area

The President of the United States declared “Midwestern disaster areas” as areas disrupted by severe storms, tornadoes, or flooding during the period beginning, May 20, 2008, and ending on July 31, 2008, in the states of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, or Wisconsin.

The Heartland Disaster Tax Relief Act of 2008 provided tax breaks to help businesses which were affected by Midwestern Disasters.

Foreign Trade Zone

A Foreign-Trade Zone is a specially designated area in or adjacent to a U.S. Customs Port Of Entry, which is considered to be outside the Customs Territory of the U.S.

National Tax Credit Group, LLCCompanies in Foreign-Trade Zones or Foreign-Trade Zone Subzone enjoy the following benefits:

  • No duty is ever paid on re-exported merchandise from a Foreign-Trade Zone
  • If the merchandise is sold domestically, no duty is paid until it leaves the zone or zones
  • Generally, no duty is paid on waste or yield loss in a Foreign-Trade Zone or Subzone
  • Duty on scrap is eliminated or reduced in a Foreign-Trade Zone
  • Generally, if foreign merchandise is manufactured within a Foreign-Trade Zone or Subzone into a product with a lower duty rate, then the lower duty rate applies on the foreign content when duty is paid
  • Merchandise in a Foreign Trade Zone may be stored, repackaged, manipulated, manufactured, destroyed or otherwise altered or changed
  • Customs processing fees are significantly reduced

Redevelopment Areas

Approximately 30 states have Redevelopment Area (RDA) programs. NTCG has all California RDAs on its database, and is working toward having all states’ RDAs electronically mapped. The primary advantage of locating in an RDA is Tax Increment Financing (or TIF). Under TIF, the RDA can spend hypothetical new property tax revenues, resulting from new development, on infrastructure in the RDA—even if the infrastructure directly benefits the firm doing the development.

Recycling Zone

This California program provides low interest loans and other benefits to firms located in the Recycling Zones which use recycled materials to manufacture products. Our database includes locations of all of these zones. We are in the process of adding other states’ “green zones” to our database.