Louisiana will be exploding with growth over the next 5 years, considering the incentives offered for businesses. For example, there is a 25% tax credit that can be sold for digital media expenditures. That is a dollar-for-dollar tax credit. There is a 50% bonus depreciation and tax exempt financing at a 2% interest rate. There is a tax credit for live performances up to 25% of expenditures. There is a tax credit of 30% which can also be sold on movie expenditures. There is a 39% federal plus a 25% state New Market Tax Credit for development in low income areas.There is a 25% tax credit for Sound Recording expenditures. We need to get the word out, and here are 14 major incentives and a summary of benefits all in one list.
14 Major Business Incentives Louisiana Offers
1. The Digital Media Incentive provides a tax credit of 25% of qualified production expenditures for state-certified digital interactive productions in Louisiana and 35% tax credit for payroll expenditures for Louisiana residents.
- 25% tax credit for digital interactive media expenditures made in Louisiana
- 35% tax credit on payroll expenditures for Louisiana residents
- No annual cap on tax credits
- The tax credit can be sold or applied against Louisiana
2. Economic Development Award Program assists publicly owned infrastructure for industrial or business development projects that promote targeted industry economic development and that require state assistance for basic infrastructure development.
- Provides a minimum of $50,000 for publicly owned infrastructure for industrial or business development projects.
3. The Enterprise Zone (EZ) program is a jobs incentive program that provides Louisiana income and franchise tax credits to a business hiring at least 35% of net new jobs from one of four targeted groups. EZs are areas with high unemployment, low income or a high percentage of residents receiving some form of public assistance. A business must create permanent net new jobs at the EZ site. A business is not required to be located in an EZ. A business does not have to invest money, only create additional jobs.
- Provides a one-time $2,500 credit per new job.
- Rebates 4% sales/use tax on materials, machinery, furniture or equipment.
- 1.5% Refundable Investment Tax Credit can be earned.
4. The Gulf Opportunity Zone Act of 2005 (GO Zone) provides federal and state tax incentives for business development in parishes most affected by hurricanes Katrina and Rita.
- 50% Bonus Depreciation Qualified property in the Louisiana GO Zone is eligible for an additional one-time, up-front 50% bonus depreciation.
- Tax Exempt Bonds In lieu of using bonus depreciation on investments, most developments in the Louisiana GO Zone qualify for tax exempt bond finance (subject to availability of bond capacity). Interest rates on GO Zone bonds can be expected to save a borrower 1.5% to 2.5% a year.
5. The Industrial Tax Exemption (ITE) Program provides property tax abatement for up to 10 years on a manufacturer’s new investment and annual capitalized additions. This exemption applies to all improvements to the land, buildings, machinery, equipment and any other property that is part of the manufacturing process.
6. The Live Performance Tax Credit program offers a fully transferable tax credit that can be sold or applied against Louisiana tax liability. Tax credits received for infrastructure cannot exceed $10 million per project and are also subject to a $60 million annual cap. There is no annual cap on the production credits. The tax credit value increases with higher levels of certified expenditures, as outlined below:
- 10% of the base investment for expenditures between $100,000 and $300,000
- 20% of the base investment for expenditures between $300,000 and $1 million
- 25% of the base investment for expenditures over $1 million
In addition to the baseline tax credits for live performance production and infrastructure, the producer may also qualify for additional incentives, including:
- 10% additional tax credit for payroll of Louisiana residents
- Transportation tax credit offered for shipping of live performance-related property
- Opportunities for collaboration with Louisiana’s top educational institutions
7. Mentor-Protégé Tax Credit program enhances Louisiana’s business environment for new construction companies. This program provides technical and economic benefits to Louisiana-based contractors who will create and/or retain jobs for Louisiana citizens, expand the state’s economy and increase available quality jobs.
- With the Mentor-Protégé Tax Credit program Act of 2007, mentor firms can receive Louisiana income or franchise tax credits of up to $50,000 per year by making technical assistance available to a protégé firm.
8. The Modernization Tax Credit program provides a 5% refundable state tax credit for manufacturers making capital investments to modernize or upgrade existing facilities in Louisiana.
- Provides a one-time 5% refundable state tax credit on capital expenditures taken over a five-year period (1% per year for five years) for manufacturers making qualified capital investments of at least $5 million.
9. The Motion Picture Industry Development Tax Credit provides a 30% tax credit on qualified motion picture expenditures with no project or program caps. Payroll expenditures for Louisiana residents qualify for an additional 5% tax credit (35% effective total credit rate).
- Production incentives fully transferable tax credit of 30% on in-state expenditures related to the production of a motion picture.
- An additional 5% tax credit for Louisiana payroll expenditures.
- No annual cap or per-project cap on tax credits.
- A production company has several ways to use a tax credit:
- Tax credits can be applied against any Louisiana income tax liabilities
- Production companies can also claim a direct refund for 85% of the face value of the tax credit from the Louisiana Department of Revenue.
- Tax credits can be transferred or sold by a production company to a third party.
10. The New Markets Tax Credit program encourages investment in urban and rural low-income areas to help finance community development projects, stimulate economic growth and create jobs.
Private-sector investors receive credit against federal income taxes. The program allows individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in Community Development Entities, or CDEs. Credits can be obtained every year the investment is held, for up to seven years of the credit period.
- Equity investments in low- to moderate-income areas may qualify for a 39% federal tax credit available through a special federal allocation for the Louisiana Gulf Opportunity Zone.
- Qualifying projects may leverage the federal program through an additional 25% state tax credit (64% total credit).
- May be used as equity for debt financing.
11. The Quality Jobs (QJ) program provides a cash rebate to companies that create well-paid jobs and promote economic development.
- Provides 5% or 6% cash rebate of annual gross payroll for new direct jobs for up to 10 years.
- Allows for 4% sales/use tax rebate on capital expenditures;
- 1.5% investment tax credit for qualified expenses.
12. The Research and Development Tax Credit encourages existing businesses with operating facilities in Louisiana to establish or continue research and development activities within the state.
- Louisiana taxpayers who incur research and development expenses may be able to receive credits against state income and corporate franchise taxes.
- Taxpayers who employee fewer than 50 Louisiana residents can receive a credit up to 40% of the apportioned amount of their expenditures.
- Taxpayers who receive certain federal grants can receive a credit up to 40% of the receipts received.
- Taxpayers who claim the federal income tax credit for research activities can receive a credit up to 20% of their apportioned increase in research activities or 25% of their apportioned federal credit, depending on the number of Louisiana resident employees.
13. The Restoration Tax Abatement (RTA) program provides five-year property tax abatement for the expansion, restoration, improvement and development of existing commercial structures and owner-occupied residences.
- Grants a five-year deferred assessment of the ad valorem property taxes assessed on renovations and improvements.
- Taxes based on assessed valuation of property prior to beginning of improvements.
- Equipment that becomes an integral part of that structure can qualify for this exemption.
- The program does not exempt the acquisition cost of the structure.
14. The Sound Recording Investor Tax Credit program rebates a 25% refundable tax credit for qualified production expenditures for state-certified sound recording projects.
- The Sound Recording Investor Tax Credit program provides a 25% refundable tax credit for qualified production expenditures. The program is subject to a cap of $3 million in tax credits each calendar year. Projects qualifying for the tax credits after the annual cap has been reached will automatically be placed in the queue to receive tax credits in the next calendar year.
Source: Louisiana Economic Development Foundation