Are you currently operating a business in Rhode Island and looking to expand? Perhaps you have a business outside of RI that you’re looking to relocate. Rhode Island, in an effort to attract and retain new and existing businesses, enacted the New Qualified Jobs Incentive Act in 2015 and has already awarded several job creators significant annual, redeemable tax credits that have allowed them to make expanding or relocating to RI more financially feasible. Here are some quick Q&A’s to learn more about the Qualified Jobs Incentive Act to see if it could potentially benefit your business!
Is the Credit Available for My Industry?
While there aren’t any limits on industries that can apply for the credit, RI Commerce provides a list of “Target Industries”, at the top of which is IT/Software, Cyber-Physical Systems, and Data Analytics. They are particularly interested in supporting the efficiency, presence, and output of these businesses in the state. The job creation requirements can vary by industry and company size, and target industries benefit from reduced requirements.
How Much of a Tax Credit Could We Expect to Receive?
The amount of tax credit received by an applicant will always be on a per new full-time job basis. Until the credit has been awarded to a cumulative 500 jobs, the tax credit could be up to $7,500 (the maximum credit) per new full-time job. Once this cumulative job threshold has been exceeded, the tax credit granted will be limited by factors including the number of new jobs created, wages paid, industry, and location.
What is Involved in the Initial Application and Reapplication Processes?
For businesses interested in this credit, a good first step would be to visit the RI Commerce’s website page for the Qualified Jobs Incentive Tax Credit (see link below). This is where you can find the actual initial application required. Generally, it requires basic business and job creation information, a project summary, details on operations, and other criteria related to eligibility. After a company has been approved for the first year, there are annual requirements to maintain this credit. This includes a “Statutory Report”, “Annual Report”, and “Base Number Employment Report”. These communicate to the state whether or not the requirements of new jobs have been met, and determine how much of a credit your company is eligible for in the following year. These reports do require verification from a CPA licensed in Rhode Island.
How Will this Credit Affect my Tax Return?
The credit received by applicants is a state credit that will reduce your tax liability dollar for dollar on your Rhode Island state tax return for both businesses and individuals through pass-through entities. Credits that exceed an applicant’s tax liability may be carried forward for up to four years. As an added bonus to this incentive, the State of Rhode Island included in the regulations that these credits may be redeemed directly with the State in whole or in part for 90% of the value of the tax credit. This means you don’t even need a tax liability to obtain value from this incentive.
What is a “Hope Community”?
In Rhode Island, certain municipalities are deemed a Hope community when the percentage of families below the poverty level is greater than that of the state as a whole. Currently, the Hope communities in Rhode Island include Central Falls, Pawtucket, Providence, West Warwick, and Woonsocket. Jobs created in a Hope community increase the amount of tax credit per job by $1,000 (not to exceed the maximum credit of $7,500). The base credit for employers begins at $2,500 and this is one of a few factors that can help employers qualify for an increased credit.
For More Information
If you’re looking for some more detailed information, RI Commerce provides links to The Qualified Jobs Incentive Act, its regulations, and application review and evaluation principles for your reference.