Publish Date

Jan 10, 2024

Boosting Business Growth: Unleashing The Benefits Of State-Based Jobs Tax Credits

In today’s competitive business environment, companies must continuously be seeking innovative strategies to drive growth, enhance profitability, create employment opportunities, and successfully compete for and retain talent. One powerful tool a company should consider is state based jobs tax credits. State governments have created programs to incentivize businesses to grow their workforce and invest in local communities. The following article will investigate the business benefits of utilizing state-based jobs tax credits, showcasing how they can encourage job creation, offer financial advantages to companies, and advance economic development. Finally, we highlight three different states jobs tax credits to illustrate the impact these programs can have.

Encouraging Job Creation and Economic Growth
States have, for many years, incentivized companies to create new jobs by expanding their workforce and investing additional dollars into the local community. These incentives are designed to help stimulate job growth, reduce unemployment rates, and promote economic development. Companies can not only impact the economic success of a city, region, or state but they can benefit from the financial advantages for doing so.

Cost Reduction and Increased Cash Flow
The ability to reduce operating costs and increase cash flow are two of the most prominent benefits to securing state-based jobs tax credits. These credits provide businesses with opportunities to offset their tax liability, resulting in reduced tax obligations. In some cases, companies can even convert the benefit into cash. By capturing these credits, companies can divert resources toward hiring and training new employees, expanding operations, or investing in research and development. Often the increased cash flow allows companies to engage in additional expansion and growth plans that otherwise may not have come to fruition.

Enhanced Workforce Development and Talent Attraction and Retention
Tax credits often come with compliance requirements related to workforce development. These can include requiring average annual salaries that exceed county/state minimums, commitments by the company to upskill the existing workforce and provide critical training opportunities. Moreover, by participating in workforce development initiatives, companies can contribute to the overall growth and competitiveness of the local labor market.

Case Study #1: Georgia Jobs Tax Credit
Georgia’s Job Tax Credit (JTC) is a prominent example of how state-based jobs tax credits can drive economic growth and employment opportunities. The program offers tax credits to businesses that create a certain number of jobs in the state. The credit amount ranges from $1,250 to $4,000 per year for 5 years for every new job created. In certain areas, the credit can also be utilized to lower payroll withholding obligations.

Case Study #2: Missouri Works Program
The Missouri Works Program has become one of the best jobs tax credit programs in the country. Unlike the Georgia JTC, Missouri offers companies the ability to forgo paying withholding taxes for 5 or 6 years depending on the nature of the project. There are multiple ways a company can qualify for the program but the most common is by creating at least 10 new jobs that are paying at least 90% of the county average wage. Larger projects, rather than receiving the withholding benefit are allowed a tax credit equal to 6% – 7% of new payroll. Any tax credit earned in this way is transferable and sellable so if a company doesn’t have a state income tax liability, they can convert the credits into cash.

Case Study #3: Rhode Island Qualified Jobs Incentive Tax Credit (QJITC)
Companies looking to expand their workforce in Rhode Island or relocate jobs from out of the state can receive an annual tax credit for up to 10 years. The minimum number of new jobs needed to qualify varies by industry and location, but the credit can be worth up to $7,500 per new job. If a company created 10 new jobs at the maximum credit amount it would generate $75,000 in tax credits for 10 years, assuming the jobs were maintained. Large job creation projects in Rhode Island can benefit a great deal from this incentive.

Wrapping Up
State-based jobs tax credits provide businesses with substantial benefits, including the stimulation of job creation, cost reduction, enhanced workforce development and access to talent. By capturing these credits, especially those that can be sold, transferred or are refundable, companies can leverage these programs to expand their workforce and gain a competitive edge in the market.

Keeping track of all the various opportunities across the United State can be a challenge for most companies. In addition, many of these programs require additional compliance filings every year which can add to the workload of tax departments. With A&M’s assistance we can not only help you qualify for and maximize these benefits, but we can also handle the administrative work that goes along with the program to ensure you don’t lose out on any benefits. If you would like to learn more, please reach out and schedule a call with one of our WOTC professionals.