Payroll tax credits, workforce training grants, infrastructure grants, property tax abatements and tax increment financing are just a few of the tools that state and local economic development groups have at their disposal to entice businesses to expand and invest in their communities.
Add these all together, and you have a tremendous amount of value available to growing businesses—value that state and local governments want to deliver to support job creation and economic expansion in their areas.
You likely read expansion, jobs and incentive announcements on a weekly basis in your local business journal. Businesses are being courted and incentivized to expand all around you.
Fortune 500 companies often use these incentives as a part of strategic plan to minimize state and local taxes and keep more money in the company. Can closely held businesses do the same? Many can, but few do. Why? Most businesses don’t actively work with their CPAs to negotiate and procure state and local incentives. These incentives don’t work like federal tax incentives. The mechanisms of benefit and the process of obtaining these credits are fundamentally different.