While programs change and vary significantly from state to state, key determinate factors always include industry sector, level of incremental headcount capital investment, and estimated wages.
Interestingly, states that offer more robust incentive packages usually have higher tax rates. Therefore, for better perspective, we’ve included each state’s Tax Competitiveness rate in parentheses below (lower is better).
1. North Carolina (12*)
The Job Development Investment Grant is a performance-based, discretionary incentive that utilizes the withholding taxes of new employees to provide annual cash grants for up to 12 years.
In lieu of the Job Development Investment Grant, the “One North Carolina Fund” offers discretionary cash grants to reimburse eligible capital expenditures. A One North Carolina Fund award is paid out in 25% increments based on meeting job creation milestones and requires matching benefits from the locality, the level of which is dependent upon the county’s tier designation.
2. South Carolina (33*)
The Job Development Credit uses personal withholding taxes generated by new employees to reimburse qualified capital expenditures for approved companies that locate or expand in South Carolina. The credit is generally available for 10 years and is capped at $3,250 per employee, per year.
In addition to the Job Development Credit, the Coordinating Council for Economic Development can offer three distinct discretionary cash grants under the Economic Development Set-Aside Program, the Closing Fund, or the Rural Infrastructure Fund for competitive projects.
3. Alabama (38*)
The Alabama Jobs Act allows the state to offer discretionary job and investment credits. The job credit component of this program offers cash rebates of up to four percent annually of gross payroll for up to 10 years for newly eligible employees. The minimum number of new jobs to be created is determined based on the county and/or project type and can be as low as 10 net new full-time jobs.
4. Louisiana (40*)
The Louisiana Quality Jobs program offers a cash rebate on a company’s net new annual payroll for up to 10 years. The level of the rebate is dependent upon each net new eligible employee’s wage rate. Employees who earn an average of at least $18/hour receive a rebate of 4% and wages of $21.66/hour and above may receive a 6% rebate.
In addition to the Quality Jobs program, the state, and many localities may offer cash grants based on incremental headcount and capital investment for competitive projects.
5. Kentucky (22*)
The Kentucky Business Investment (KBI) program provides income tax credits and up to 4% wage assessments for eligible new or expanding operations. The KBI program is beneficial because of its flexibility in allowing benefits to flow through to wage assessments if a company does not have a sufficient corporate income tax or limited liability entity tax liability to utilize the KBI credits. In addition, localities may contribute a portion of their local occupational tax as well.
The Economic Development Fund Grant is another discretionary program that can be offered by the state to aid a project with infrastructure improvements which is funneled through the local government.
6. Oklahoma (21*)
The Oklahoma Quality Jobs incentives program provides quarterly cash payments of up to 5% of new payroll for up to 10 years. To qualify, companies must achieve an average wage threshold based on the county and $2.5 million in new annual payroll within three years of the effective date of an agreement. There are certain circumstances when the payroll threshold may be lower.
7. Indiana (10*)
The Indiana Economic Development for a Growing Economy (EDGE) program offers a refundable corporate income tax credit that is calculated as a percentage of the anticipated tax withholdings generated from net new employees in the state. The percentage is dependent upon the nature and size of the project, as well as the average wages.
8. Arkansas (36*)
“Create Rebate” provides annual cash payments based on a company’s annual payroll for new, full-time, permanent employees. This discretionary incentive requires a minimum payroll depending upon the tier of the county in which the project is located which must be met within 24 months from the date an incentive agreement is executed.
