04.29.14 |
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Money on the Table: Taking Advantage of Louisiana’s Enterprise Zone Tax Credits

The state of Louisiana has been a pioneer in the development of enterprise zones to attract businesses and jobs to underdeveloped areas and its current tax credit can be a valuable one worth thousands of dollars for creating new jobs and a rebate on either sales tax or capital investment.

In 1981, the state established the first enterprise zone and tax credits for businesses operating in those areas. In June of 2013, three key changes were made in the program:

1. Retailers with more than 100 employees nationwide, except for grocery stores and pharmacies located in enterprise zones, are no longer eligible for the tax Louisianacredit.

2. The tax credit now applies only to the creation of full-time jobs. Part-time jobs no longer count toward the credit.

3. To be eligible, 50% of the employees for newly created jobs must meet one of the following criteria: residing within one of the state’s enterprise zones, receiving an approved form of public assistance, lacking basic skills (for example, proficiency in reading, writing or math below the ninth grade level), or being considered unemployable by traditional standards. In the past, only 35% of employees had to meet one of these criteria.

The credit provides a one-time $2,500 tax credit for each newly created job. However, these jobs must be in addition to the company’s workforce. For example, a business cannot eliminate jobs in another location in order to add them to an enterprise zone and still receive the tax credit.

To receive the credit, businesses must either create the lesser of five net new full-time jobs within two years of applying for the credit or increase their current national workforce by 10% within 12 months, although only jobs created in Louisiana enterprise zones are eligible for the credit itself.

On top of the jobs credit, businesses can also receive a 4% rebate of sales and use taxes paid on qualifying materials, machinery, furniture, or equipment purchased or a 1.5% refundable tax credit for qualified capital expenditures.

Businesses interested in applying for the tax credit must do so before they begin any hiring. Louisiana Economic Development offers more information about the program and a list of frequently asked questions.

 

According to internal ADP data, up to 50% of the billions of dollars in tax savings available nationwide go unclaimed. Find out more about the ADP SmartComplianceSM Tax Credits Module here.


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