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TAX INCENTIVES Enhanced Enterprise Zone Film Production Tax Credit Program Loan Guarantee Fee Tax Credit Program Mutual Fund Tax Apportionment Quality Jobs Program Rebuilding Communities Tax Credit Program Sales Tax Exemption Small Business Incubator Tax Credit Program Chapter 353 Tax Abatement – "Chapter 353 Tax Abatement" is an incentive that can be utilized by cities to encourage the redevelopment of blighted areas by providing real property tax abatement and eminent domain. Authorization Chapter 353 of the Revised Statutes of Missouri (the "Urban Redevelopment Corporation Law"). How the Program Works Tax abatement is available for a period of 25 years, which period begins to run when the Urban Redevelopment Corporation takes title to the property. During the first 10 years, the property is not subject to real property taxes except in the amount of real property taxes assessed on the land, exclusive of improvements, during the calendar year preceding the calendar year during which the Urban Redevelopment Corporation acquired title to the real property. 353.110.1 RSMo. If the property was tax exempt during such preceding calendar year then the county assessor is required to assess the land, exclusive of improvements, immediately after the urban redevelopment corporation takes title. During the next 15 years, the real property may be assessed up to 50% of its true value. 353.110.2 RSMo. This means that the city may approve a development plan, which provides full tax abatement for 25 years. Payments in lieu of taxes ("PILOTS") may be imposed on the urban redevelopment corporation by contract with the city. PILOTS are paid on an annual basis to replace all or part of the real estate taxes, which are abated. The PILOTS must be allocated to each taxing district according to their proportionate share of ad valorem property taxes. 353-110.4 RSMo. Enhanced Enterprise Zone – Provides state tax credits to new or expanding businesses in a Missouri Enhanced Enterprise Zone. Additional information for the Enterprise Zone program is available through the State of Missouri. Authorization Eligible Areas Eligible Applicants How the Program Works To receive tax credits in any of the ten years, the facility must create at least 2 new jobs and $100,000 in new investment in that year as compared to the base year (the year prior to the commencement of operations at the facility). Eligible investment expenditures include the original cost of machinery, equipment, furniture, fixtures, land and building, and/or eight times the annual rental rate paid for the same. Inventory is not eligible. Available Zone Maps Film Production Tax Credit Program – Provides a state income tax credit to qualified film production companies up to 50% of the company's expenditures in Missouri for production or production related activities necessary for the making of a film, not to exceed $1 million in tax credits per project. Loan Guarantee Fee Tax Credit Program – Provides state tax credits to an "eligible small business" for the amount of a guarantee fee paid to either the U.S. Small Business Administration or the U.S. Department of Agriculture for a small business loan. Authorization Eligible Areas Eligible Applicants How the Program Works Mutual Fund Tax Apportionment – Stimulates the mutual fund industry in the state by allowing those certified by DED to utilize a more favorable state income apportionment method for tax purposes. Quality Jobs Program – Missouri’s newest incentive program facilitates new quality jobs by targeted business projects. Eligible Areas - Anywhere in the state of Missouri Eligible Businesses - For-profit and non-profit businesses except for gambling, retail trade, food and drinking places, companies regulated by the Public Service Commission, companies that are delinquent in non-protested taxes or other payments (state, federal or local), any company that has filed for or has publicly announced its intention to file for bankruptcy, public entities, or religious entities. The average wage of the new jobs must equal or exceed the county average wage (as published by DED), and the company must offer health insurance and pay at least 50% of the premium. • Average Wage: Total annual payroll of the new jobs divided by the average annual number of new jobs. To qualify, the company must create a minimum number of new jobs at the project facility prior to the “deadline” date, based on the type of project:
Program Benefits: For “Small/Existing” businesses, the benefits of the program are the retention of the state withholding tax of the new jobs. For “Technology” and “High Impact” businesses, the benefits of the program are (a) the retention of the state withholding tax of the new jobs; and (b) state tax credits, which are refundable and/or sellable. The program benefits are based on a percentage of the payroll of the new jobs. The program benefits are not provided until the minimum new job threshold is met and the company meets the average wage and health insurance requirements. The program benefits are calculated as follows: • Small/Existing businesses: Retain 100% of the withholding tax of the new jobs, each year for:
• Technology businesses: 5% of the payroll of the new jobs each year for five years; plus:
• High Impact businesses: 3% of the payroll of the new jobs each year for five years; plus:
”Average Wage Bonus”(company average wage as a percentage of county average wage): • Greater than 120% and up to 140%: 1/2 % bonus of payroll of the new jobs. ”Local Incentives Bonus”(amount of local incentives provided to the project as a percentage of the amount of new local tax revenues derived from the project, over 10 years): • 10-24%: 1% bonus of payroll of the new jobs. Each time the business meets the minimum new job threshold, it may start a new five-year period (three-year for small/existing businesses) for the net new jobs created. There is no limit on the number of periods a company may use the program, as long as minimum new job thresholds and other program qualifications are met. “New jobs” are defined as full-time (35 or more hours/week), year-round employees of the company that are employed at the project facility, based on the increase from the “base employment” (the average employment for the prior twelve months or the number of employees at the project facility at the time of the proposal, whichever is higher). In the event the company (or a related company) reduced jobs at another facility in Missouri with related operations, the new jobs at the project facility would be reduced accordingly. Eligible Use of Tax Credits: This tax credit can be applied to Chapter 143 (state income tax, excluding withholding tax) and Chapter 148 (financial institutions tax). Tax credits can only be applied to tax liability for the year in which they were earned. Any unused balance is refundable. The credits may also be transferred, sold or assigned. Funding Limits: There is no annual cap on the retained withholding taxes. The annual cap of tax credits for all projects is $12,000,000, which is provided on a first-come basis. Application Procedure: Upon the submission of a “Notice of Intent” by the business, DED will issue a confirmation to the business that will: • Confirm that the type of project/business is eligible. Reporting: On an annual basis, the business must submit a report documenting the new jobs created, the total payroll, and confirming that the business meets the health insurance requirements for the new jobs. Special Program Requirements: A business cannot earn benefits under this program if earning benefits for the same project for the same time period of any of the following state programs:
If a business utilizes the New Jobs Training Bond program, the Quality Jobs benefits would not include the withholding taxes but only the state tax credits. For estimated state withholding taxes and county average wages, download full PDF version. Rebuilding Communities Tax Credit Program – Helps stimulate eligible business activity in Missouri's "distressed communities" by providing state tax credits to eligible businesses that locate, relocate or expand their business within a distressed community. Sales Tax Exemption – Machinery and equipment used to establish a new manufacturing facility or expand an existing manufacturing facility is exempt from local and state sales/use tax, provided such machinery/equipment is used directly to manufacture a product ultimately intended for sale. Small Business Incubator Tax Credit Program – The Missouri Department of Economic Development (DED) may issue a 50% state tax credit to a taxpayer who makes a contribution to an approved incubator sponsor in Missouri. Authorization How the Program Works Eligible Areas |
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