Federal Site Selection Financial Incentives
Federal Financial Incentives Worth Knowing
The federal government needs people re-employed. There are several tax credits available from the federal government that your business should utilize.
Work Opportunity Tax Credit [WOTC] Back To Top
An employer may qualify for a tax credit of up to $9,000 per employee if the employee is a member of a designated target group and meets that group's specific requirements. Application must be completed and submitted within 28 days of hire.
Target Groups that Qualify for WOTC:
- Qualified recipients of Temporary Assistance to Needy Families (TANF)
- Qualified veterans receiving Food Stamps or qualified veterans with a service connected disability who:
- Have a hiring date which is not more than one year after having been discharged or released from active duty OR
- Have aggregate periods of unemployment during the one year period ending on the hiring date that equal or exceed six months.
- Ex-felons hired no later than one year after conviction or release from prison
- Vocational rehabilitation referrals, including Ticket Holders with an individual work plan developed and implemented by an Employment Network
- Qualified Food Stamp recipients ages 18 but not 40 on the hiring date.
- Qualified recipients of Supplemental Security Income (SSI)
- Long-term family assistance recipients
$1,000 New Hire Retention Tax Credit Back To Top
This tax credit encourages the retention of new hires (retained workers). The employer may claim the credit for each retained worker. A retained worker is a qualified employee (as defined for purposes of the payroll tax exemption) who remains an employee for at least 52 consecutive weeks, and whose wages (as defined for income tax withholding purposes) for the last 26 weeks equal at least 80% of the wages for the first 26 weeks. The amount of the credit is the lesser of $1,000 or 6.2% of wages (as defined for income tax withholding purposes) paid by the employer to the retained worker during the 52 consecutive week period.
35% Small Business Health Care Tax Credit Back To Top
This tax credit is worth up to 35% of a small business' premium costs in 2010 (25% for tax-exempt employers). On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). It makes it more affordable for employers with low and moderate income workers afford to offer health insurance coverage to employees. A qualifying employer must cover at least 50% of the cost of health care coverage for some of its workers based on the single rate, have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible) and must pay average annual wages below $50,000. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Small Business Health Care Tax Credit Scenarios
Examples of Employers Receiving the Credit
Example #1: Auto Repair Shop with 10 Employees Gets $24,500 Credit for 2010
Main Street Mechanic:
- Employees: 10
- Wages: $250,000 total, or $25,000 per worker
- Employee Health Care Cost: $70,000
- 2010 Tax Credit: $24,500 (35% Credit)
- 2014 Tax Credit: $35,000 (50% Credit)
Example #2: Restaurant with 40 Part-Time Employees Gets $28,000 Credit for 2010
Downtown Diner:
- Employees: 40 half-time employees (the equivalent of 20 full-time workers)
- Wages: $500,000 Total, or $25,000 per full-time equivalent worker
- Employee Health Care Cost: $240,000
- 2010 Tax Credit: $28,000 (35% Credit with Phase-out)
- 2014 Tax Credit: $40,000 (50% Credit with Phase-out)
Example #3: Foster Care Non-Profit with 9 Employees Gets $18,000 Credit for 2010
First Street Family Services.org:
- Employees: 9
- Wages: $198,000 Total, or $22,000 per worker
- Employee Health Care Cost: $72,000
- 2010 Tax Credit: $18,000 (25% Credit)
- 2014 Tax Credit: $40,000 (35% Credit)
HUBZone Bid Preference for Federal Contracts Back To Top
The HUBZone Program stimulates economic development and creates jobs in urban and rural communities by providing Federal contracting preferences to small businesses. These preferences go to small businesses that obtain HUBZone certification in party by employing staff who live in a HUBZone. The company must also maintain a "principal office" in one of these specially designated areas.
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