RSM Resources

Tax Tips: State and local governments provide tax and financial incentives for manufacturers and distributors

State and local governments around the country have long known that manufacturing and distribution operations enhance their tax base and bring well-paying jobs to their communities. In an effort to attract and retain these jobs, economic development agencies and taxing authorities often provide significant tax and financial incentives for manufacturers and distributors. 

Companies considering relocation or expansion may qualify for statutory and discretionary (negotiated) incentives. Enticements can vary greatly in terms of requirements, approval, value and other details. For example, receipt of some inducements is dependent on time sensitivities or special certification and reporting conditions. Some incentives offer one-time benefits and others grant annuity benefits. Finally, a number are statutory, while others are discretionary and available only through negotiation. 

Tax and financial incentives for expanding or relocating companies include (but aren’t limited to):

1. Real and personal property tax abatements and exemptions
2. Income and franchise tax credits
3. Sales and use tax exemptions
4. Training grants
5. Tax increment financing
6. Low-cost financing
7. Infrastructure assistance
8. Fee waivers

Jerry Hammond is a director with RSM McGladrey State and Local Tax Practice. For more information, contact him at jerry.hammond@rsmi.com.