Sales and Use Tax Credit
Businesses may be able to claim a state tax credit equal to the sales and use tax paid on qualified equipment purchased and used in the Enterprise Zone on or after February 1, 2012. Qualified equipment or machinery parts purchased for exclusive use in the Enterprise Zone include assets such as manufacturing, data processing, office, audio/video, and computer equipment. In any year, individuals may be able to claim a credit on the first $1,000,000 of qualifying purchases. Corporations may be able to claim credits on up to $20,000,000 per year.
Business Expense Deduction
Businesses may be able to deduct up to $40,000, depending on the year purchased, of the cost of business equipment, furnishings, and fixtures as well as other depreciable personal property used in the Enterprise Zone as a business expense. The remaining value of the purchased item can be depreciated in following years under generally accepted accounting practices.
Net Operating Loss Carryover
Businesses or individuals in the Enterprise Zone who show a net operating loss may be able to carry that loss forward for up to 15 years to reduce future tax liability. Minimum taxes still apply.
Net Interest Deductions for Lenders
A bank or individual making a loan to a business whose sole activity takes place in the Enterprise Zone may deduct direct expenses incurred in making the loan from the interest income. The lender may also take a deduction equivalent to the net interest produced by the loan. The lender may not have an equity interest in the business. As a borrower, this could mean more favorable rates or terms on a business loan. Be sure to find out if your bank participates in the Net Interest Deductions available to participating Enterprise Zone businesses.
Income Tax Credit for Employees
Qualified employees working in the Enterprise Zone may qualify to claim state tax credits on their personal income tax.