tax credits, Incentives, & Deductions

This is a dollar for dollar corporate tax credit available to businesses for hiring employees from distinct groups who have historically faced barriers to employment.  Capture streamlines the entire process, maximizing value while mitigating labor costs.

The credit is designed to encourage businesses towards innovation. Qualified research means activities for which expenses may be treated as section 174 expenses. This research must be undertaken for discovering information that is technological in nature, and its application must be intended for use in developing a new or improved business component of the taxpayer. In addition, substantially all of the activities of the research must be elements of a process of experimentation.

The Empowerment Zone Employment Tax Credit is for businesses in Empowerment Zones that hire local residents. Empowerment Zones were created by the U.S. Department of Housing and Urban Development. They encourage business growth and economic development in low-income communities. The credit is based on 20% of the first $15,000 in wages earned by the qualifying employee. Employers must verify their business location and employees address as being inside an Empowerment Zone.

The FICA Tip Tax Credit is a general business tax credit available to food and beverage establishments for the Social Security and Medicare taxes they pay on employees' tip income, also known as FICA.  This credit goes against their federal income tax based on the share of employment  taxes they pay on tip income that employees report.  Any unused credit can be carried forward up to 20 years until it is completely utilized.

Companies who provide childcare services to their employees may be eligible for this general business credit.  It covers qualified expenditures for a childcare facility and for childcare resource and referral.

The Employer Provided Childcare Tax Credit offers employers a tax credit up to $150,000 per year to offset 25% of qualified childcare facility expenditures and 10% of qualified childcare resource and referral expenditures. 

Eligible employers may be able to claim a tax credit of up to $5,000, for three years, for the ordinary and necessary costs of starting a SEP, SIMPLE IRA or qualified plan (like a 401(k) plan.). The  tax credit reduces the amount of taxes you may owe on a dollar-for-dollar basis. Eligible employers are defined as: 1.) Companies with 100 employees or less who were paid at least $5,000 in wages each in the prior year. and 2.) Company has at  least one non-highly paid employee on plan. 

The CHIPS and Science Act is federal legislation that provides funding for the development of facilities to research, manufacture and produce semiconductors and semiconductor-related materials and equipment. Qualifying companies will apply to the United States Secretary of Commerce and are eligible to receive no more than $3 billion per fabrication.

The credit was designed to reward multifamily developers and homebuilders who take part in constructing energy-efficient homes. The tax credit is calculated  per dwelling unit, depending on the home type, number of stories, and the energy efficiency requirements

This credit incentivizes community development and economic growth through the use of tax credits that attract private investment to distressed communities.  The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). 

The Low-Income Housing Tax Credit (LIHTC) subsidizes the acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants.  Many types of rental properties are LIHTC eligible, including large apartment buildings, single-family homes, or two- to four-unit buildings.  Owners or developers of projects receiving LIHTCs agree to meet an income test for tenants and a gross rent test. 

The Historic Preservation Tax Credit is an Investment Credit and part of the General Business Credit that a taxpayer can claim against the income tax. Taxpayers that own an interest in the building directly or through a passthrough entity, or are lessees of the building in certain cases, are eligible to claim the rehabilitation credit.  

Designed to spur investment in blighted properties and assist in revitalizing communities, the federal brownfields tax incentive is a critical tool in brownfields cleanup and redevelopment efforts.  Cleanup costs are fully deductible in the year that they are incurred, rather than capitalized over time (up to 30 years in some cases). There are three requirements to qualify: 1.) The property must be owned by the taxpayer incurring the eligible cleanup expenses, and be used in a trade or business 

Section 179 of the U.S. internal revenue code is an immediate expense deduction that business owners can take for purchases of depreciable business equipment instead of capitalizing and depreciating the asset over a period of time.  Section 179 of the tax code allows business taxpayers to deduct the cost of certain property as an expense when the property is first placed in service. 

Section 179D provides taxpayers with an incentive to make certain commercial building property more energy efficient.  This provides immediate deductions to encourage the construction of energy efficient commercial buildings and multifamily buildings that are at least four stories tall.  There are additional provisions for retrofits of older buildings to become eligible for the deduction as well, however they have reduced requirements to qualify.

Businesses that buy a qualified commercial clean vehicle may qualify for a 45W tax credit. The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings of under 14,000 pounds and $40,000 for all other vehicles. There is no limit on the number of credits your business can claim. For businesses, the credits are nonrefundable, so you can't get back more on the credit than you owe in taxes. The  credit can be carried over as a general business credit.

The credit applies to both equipment and minerals produced in the U.S. and sold between December 31, 2022, and December 31, 2032. The equipment must be sold to an unrelated party as part of the taxpayer’s trade or business. The base rate of the credit depends on the specific eligible component being manufactured. There is a credit amount phase-out beginning in 2030 for only the manufactured components; however, there is no phase-out associated with the production of critical minerals. 

Manufacturers and other entities that invest in qualifying advanced energy projects may apply for a tax credit through the U.S. Department of Energy.   The Advanced Energy Project Tax Credit aims to strengthen U.S. industrial competitiveness and clean energy supply chains.  The credit applies to three different types of projects: 1) Clean energy manufacturing and recycling, (2) greenhouse gas emission reduction, and (3) critical materials refining, processing, and recycling.

A credit for qualified clinical trial expenses relating to so-called 'orphan drugs' (i.e. certain drugs intended to treat rare diseases or conditions that are designated as such by the FDA).  Credit value is determined by amounts paid or incurred by the company as expenses for activities related to clinical testing.

This credit is for employers affected by qualified disasters. An eligible employer who continued to pay or incur wages after the employer’s business became inoperable because of damage from a qualifying major disaster may be able to claim a credit equal to 40% of up to $6,000 of qualified wages paid to or incurred for each eligible employee..

37 States in the U.S. offer an additional Research & Development Tax Credit on top of claiming the Federal Credit.  Eligibility does not waiver from the Federal standard pertaining to determining qualified activities and qualified expenses, but the value of the credit does vary and is respective to the particular State it's being claimed in.

There are more than 15+ States that offer additional hiring credits where the eligibility of the particular employee can be dually screened from their initial Federal WOTC survey.  The value of the credits, submission guidelines, and deadlines vary by state.  Capture's software has been designed to provide this dual screening, determine additional eligibility, pre-populate forms, and automated submissions for optimal processing.

The credit is $2000 per qualifying hire and is available in the tax year during which the employee has completed 12 months of consecutive employment.  This credit is available to a business that meets the requirements of either the Full Employment Act of 2011 or the Alabama Small Business Jobs Act that hires resident unemployed veterans or combat veterans for a full-time position paying at a minimum $14 per hour.

A taxpayer that hires a veteran and employs the veteran in the state is entitled to a credit. The amount of credit that may be applied by an employer for each qualifying veteran who works 1,560 hours over the first year of employment is $3,000 for a disabled veteran and $2,000 for a veteran who is not disabled.  The credit is valued at $1,000 for a veteran employed in the state for 500 hours or more but not to the 1,560 hour mark.

The Rural Job Tax Credit Program offers an incentive for eligible businesses located within one of 36 designated Qualified Rural Areas to create new jobs. The tax credit ranges from $1,000 to $1,500 per qualified employee and can be taken against either the Florida Corporate Income Tax or the Florida Sales and Use Tax. These tax credits are provided to encourage employment opportunities that improve the quality of life of those employed and to encourage economic expansion.

The Urban Job Tax Credit Program offers an incentive for eligible businesses located within one of the 13 designated urban areas to create new jobs. The credit ranges from $500 to $2,000 per qualified job and can be taken against either the Florida Corporate Income Tax or the Florida Sales and Use Tax. The credit can only be taken against one of these two taxes. These tax credits are provided to encourage employment opportunities that improve the quality of life of those employed and to encourag

The Idaho Semiconductors for America Act provides qualifying Idaho semiconductor companies with a sales and use tax exemption on the purchase of qualifying construction and building materials. To be eligible, companies must qualify for the U.S. CHIPS and Science Act of 2022. 

This is a refundable credit for businesses are 1.) certified by the New York State Department of Labor to participate in the New York Youth Jobs Program and 2.) hires qualified employees between the ages of 16 to 24. The qualified employees must start work between January 1 and December 31 of the program year in which you are participating, and 3.) received an annual final certificate of tax credit from the New York State Department of Labor.

If the job is located in an urban progress zone, a port enhancement zone, or an agrarian growth zone, the amount of the credit is increased by one thousand dollars ($1,000) per job. In addition, if a job located in one of these zones is filled by a resident of that zone or by a long‑term unemployed worker, the amount of the credit is increased by an additional two thousand dollars ($2,000) per job.

Area Development Tier Amount of Credit:

Tier 1 = $12,500

Tier 2 = $5,000

Tier 3 = $750

The Texas Tax Refund for Employers is another great tax benefit. To qualify, an employer must 1.) pay certain State of Texas taxes, 2.) have paid wages to a Texas resident on their first year of employment, and the resident had received at least 1 month of TANF or Medicaid benefits within 6 months of starting the job, and 3.) provide for and pay a portion of a qualifying employee's HMO health plan, Employee Retirement Income Security Act (ERISA) plan, or a health plan approved by Texas.

Opportunity Zone's  purpose is to spur economic growth & job creation in low-income communities while providing tax benefits to investors.  There are  8,764 OZs that have been designated  in all 50 states, the District of Columbia & 5 U.S. territories.  These communities & certain neighboring areas, defined by population census tracts, could qualify as Opportunity Zones. States nominated communities for the designation, and the U.S. Department of the Treasury certified those nominations.

Eligibility for this nonrefundable credit requires the owner of a business, partner in a partnership, or beneficiary of an estate / trust be subject to the NYC UBT & be a full-year or part-year New York City. The amount of credit allowed to a New York City resident or part-year resident with city taxable income of $42,000 or less is 100% of the UBT imposed. The credit value decreases for income of $42,000 - $142,000 from 100% to 23%. For taxpayers at $142,000+ the credit is 23%.

A 12yr annual credit of $3,000 is available for each qualified job relocated into targeted areas, and $1,000 in non-targeted areas. Businesses are qualified if they are relocating to New York City, or from below 96th Street in Manhattan to any other area of the City, with some restrictions for businesses moving from south of Houston Street. REAP benefits are also available to businesses relocating into Lower Manhattan. Improvements to buildings are required, and retail firms are ineligible.