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There’s Always Room for More: Identifying Negotiable or Discretionary Incentives

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There are many different types of tax and business incentives offered by the federal and state government to help encourage businesses to either locate or expand in targeted areas.

Many of these incentives are designed to stimulate job growth and economic development.  Some incentives are categorized as supplemental incentives (where eligibility is contingent upon participation in other incentive programs). Another category of incentives available to businesses is incentives that are negotiable or discretionary, meaning the incentive program can be customized to accommodate a particular situation or need. The terms (of eligibility, incentive amounts, etc.) of the incentive program can be negotiated by the business applying for the incentive, depending on the needs of the area in which the business is looking to locate or expand.

Areas (classified as states, cities, or enterprise zones within cities) can vary in their level of economic distress.  Some areas might suffer from a low employment rate, limited economic growth, or high poverty level/low income. An economic development department will frequently offer tax incentives to help stimulate economic progress in these areas.  Incentives in this category can take on many forms. Common incentives include training, investment, or hiring incentives that may be offered in the form of cash grants, a percentage of investment expenses, or a tax credit to offset tax liability.

Because there are so many types of available incentives which may vary based on economic needs, a business will occasionally have economic benefits to offer the state that may exceed what is covered by the incentive programs currently being offered. A business in this situation may enter into negotiations with an economic development department to implement supplementary incentives that may be applied by the government agency with jurisdiction over the area.

Here are some common situations in which your business may want to look into these types of incentives:

  • Your business is looking to implement significant new technology or upgrades, devise a new process (overhauling methods of operation, etc.) or invest in significant expansion through the purchase of new equipment or acquisition of new plants/property.
  • Your business is going through a hiring boom in a particular area of economic need.
  • Your business is relocating as part of another discretionary incentive program previously granted by the state it is relocating to and the costs end up being greater than initially anticipated.

It may be worthwhile to investigate your company’s eligibility for additional negotiable discretionary incentives if you find yourself in any situation where your business is undergoing a change that could stimulate economic growth or job creation, and when the commonly-offered incentive programs are not sufficient to cover the costs.

General categories of negotiable or discretionary incentives

Types of negotiable or discretionary tax and business incentives can vary widely, but here are some more common ones:

  • Cash grants
  • Tax credits
  • Wage subsidies
  • Training grants
  • Property tax abatements
  • Utility rate reduction
  • Subsidized land
  • Low cost financing

Learn more about how the ADP SmartCompliance® Tax Credits module can help businesses maximize the capture of tax credits and incentives for which they are eligible.

Learn More About ADP SmartCompliance® Tax Credits


The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice.  The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.

1Thrive North Carolina: Job Development Investment Grants (JDIG) – http://www.thrivenc.com/incentives/financial/discretionary-programs/job-development-investment-grant

2Economic Development for a Growing Economy Tax Credit: http://iedc.in.gov/tax-credits-exemptions/economic-development-for-a-growing-economy-tax-credit



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