Business tax credits Tax credit

1 business tax credits

1.1 united states

1.1.1 federal nonrefundable investment tax credits
1.1.2 federal historic rehabilitation tax credit
1.1.3 renewable energy/investment tax credit (itc)

1.1.3.1 renewable energy/production tax credit (ptc)
1.1.3.2 low income (affordable) housing tax credit (lihtc)
1.1.3.3 qualified school construction bond (qscb)


1.1.4 work opportunity tax credit (wotc)
1.1.5 american opportunity tax credit (aotc)


1.2 state tax credits

1.2.1 oregon residential energy tax credit (retc)

business tax credits

many systems offer various incentives businesses make investments in property or operate in particular areas. credits may offered against income or property taxes, , nonrefundable extent exceed taxes otherwise due. credits may offered individuals entities. nature of credits available varies highly jurisdiction.

united states

u.s. income tax has numerous nonrefundable business credits. in cases, amount of these credits in excess of current year tax may carried forward offset future taxes, limitations. credits include following (for full list see section 38 of internal revenue code):

alternative motor vehicle credit: several credits available purchase of varying types of non-gasoline powered vehicles.
alternative fuel credits: credit based on amount of production of non-petroleum fuels.
disaster relief credits
credits employing individuals in areas or formerly on welfare or in targeted groups
credit increasing research expenses
a variety of industry specific credits

many sub-federal jurisdictions (states, counties, cities, etc.) within u.s. offer income or property tax credits particular activities or expenditures. examples include credits similar federal research , employment credits, property tax credits, (often called abatements), granted cities building facilities within city, etc. these items negotiated between business , governmental body, , specific particular business , property.

federal nonrefundable investment tax credits

tax credits, while come in many forms, authorized incentives under internal revenue code (and state tax codes) implement public policy. congress, in effort encourage private sector provide public benefit, allows participating taxpayer dollar dollar reduction of tax liability investments in projects not occur credits.

federal historic rehabilitation tax credit

the legislative incentive program encourage preservation of “historical buildings”. congress instituted two-tier tax credit incentive under 1986 tax reform act. 20% credit available rehabilitation of historical buildings , 10% credit available non-historic buildings, first placed in service before 1936. benefits derived tax credits in year property placed in service, cash flow on 6 years , repurchase options in year six.

renewable energy/investment tax credit (itc)

the investment tax credit allowed section 48 of internal revenue code. investment tax credit varies depending on type of renewable energy project; solar, fuel cells ($1500/0.5 kw) , small wind (< 100 kw) eligible credit of 30% of cost of development, no maximum credit limit; there 10% credit geothermal, microturbines (< 2 mw) , combined heat , power plants (< 50 mw). itc generated @ time qualifying facility placed in service. benefits derived itc, accelerated depreciation, , cash flow on 6-8 year period.

though set expire @ end of 2015, itc residential solar installations renewed in december 2015. credit continue @ 30% through 2018, , decline 10% in 2022. itc other technologies (including geothermal) extended 1 year. installations considered eligible itc based on date construction starts.

renewable energy/production tax credit (ptc)

section 45 of internal revenue code allows income tax credit of 2.3 cents/kilowatt-hour (as adjusted inflation 2013) production of electricity utility-scale wind turbines, geothermal, solar, hydropower, biomass , marine , hydrokinetic renewable energy plants. incentive, renewable energy production tax credit (ptc), created under energy policy act of 1992 (at value of 1.5 cents/kilowatt-hour, has since been adjusted annually inflation). in late 2015 large majority in congress voted extend ptc wind , solar power 5 years , $25 billion. analysts expect $35 billon of investment each type.

low income (affordable) housing tax credit (lihtc)

under program, created in 1986 tax reform act, u.s treasury department allocates tax credits each state based on states population. these credits awarded developers who, equity partner, develop , maintain apartments affordable units. benefits derived tax credits on 10-year period.

qualified school construction bond (qscb)

qscbs u.s. debt instruments used schools borrow @ nominal rates rehabilitation, repair , equipping of facilities, purchase of land upon public school built. qscb holder receives federal tax credit in lieu of interest payment. tax credits may stripped qscb bonds , sold separately. qscbs created section 1521 of american recovery , reinvestment act of 2009. internal revenue code section 54f addresses qscbs.

work opportunity tax credit (wotc)

the work opportunity tax credit (wotc) federal tax credit providing incentives employers hiring groups facing high rates of unemployment, such veterans, youths , others. wotc helps these targeted groups obtain employment able gain skills , experience necessary obtain better future job opportunities. wotc based on number of hours employee works , benefits employer directly.

in december 2014, credit extended retroactively beginning of 2014 tax increase prevention act of 2014 (tipa), p.l. 113-295. act authorized credit through december 31, 2014.

american opportunity tax credit (aotc)

the american opportunity tax credit (aotc) part of american recovery , reinvestment act, signed law in february 2009. aotc replaced hope scholarship credit tax years 2009 , 2010, increased benefits hope credit recipients , many other students providing maximum benefit $2,500 per student, 100 percent of first $2,000 in tuition , 25 percent of next $2,000, expanding income range on taxpayers can claim credit, , making credit partially refundable. critics have complained complexity , restrictions on eligibility make actual benefits per post-secondary student lower theoretical maximum, , tax credits, higher education remains tax-disadvantaged compared other investments.

state tax credits

approximately 43 states provide variety of special incentive programs utilize state tax credits. these include brownfield credits, film production credits, renewable energy credits, historic preservation credits , others. amount of credit, term of credit , cost of credit differs state state. these credits can either in form of certificate, can purchased asset, or in more traditional pass through entity. tax credits can used against insurance company premium tax, bank tax , income tax.

oregon residential energy tax credit (retc)

the state of oregon s retc tax credit solar systems. in 2016, oregon governor kate brown released new budget proposal not extend retc program. in 2015, retc gave $12.2 million in tax credits; in 2014, amount approximately $4.2 million. under budget proposal, credit sunset @ end of 2017. extension of tax credit top priority oregon s solar industry.