Utah Incentives

STATE OF UTAH INCENTIVES

EDTIF (Economic Development Tax Increment Financing) / HB 11

Economic Development Tax Increment Financing (EDTIF) / HB 11 – EDTIF is the State’s most widely used incentive. It is a post performance rebate of “new state revenue” generated by a new project, including the payroll tax of the new employees, corporate income tax and sales tax. Incentives granted are based on the potential number of jobs created, wage levels of the new jobs, capital investment in the project, purchases from local suppliers, location of the project and the type of industry. In Cedar City those numbers are defined as creating at least 25 jobs that are at least 125% above the county’s average wage. A local incentive and creation of an Economic Development Zone at the project site are requirements of this incentive. Maximum incentive is 30% of new state revenues over 20 years. Typical incentives range from 10% – 20% over 5 – 10 years.

Qualifying companies must create new jobs paying at least 125% of the county median wage in urban areas, and 100% of the county median wage in rural area. Employees within the client company moving from other parts of the state will not be eligible. The maximum allowable rebate is 30% of new state revenues over 20 years. Typically incentives range from 10% – 20% tax rebates over 5 – 10 years.

IAF (Industrial Assistance Fund)

Companies expanding or relocating in Utah may apply for incentive grants from the IAF (Industrial Assistance Fund). The IAF is a discretionary fund allocated by the state legislature to help encourage job growth in Utah. Incentives are paid on a post performance basis after jobs are created in yearly increments. Jobs must then be retained over the life of the project.

The length of the grant is typically 5 years with an incentive range of $1,000 to $3,000 per new job.

There are five types of IAF grants available to companies that meet the following qualifications:

Urban

Locating in Salt Lake, Utah, Weber, or Davis County
Creating at least 50 new jobs that pay at least 125% of the county median wage

Rural

Locating outside of the urban counties mentioned above
Creating ANY number of new jobs that pay at least 100% of the county median wage

Corporate Headquarters

Relocating to Utah from out of state
Utah is competing with other states for the company’s business

Custom Fit Training

The Custom Fit Training program provides specialized training for companies to train their employees. Custom Fit Training is administered through Utah College of Applied Technology Centers and State Colleges and Universities. Training may be conducted at Salt Lake Community College Campuses, Applied Technology Centers, or the business location. Instructors may be educators from Utah institutions, private sector consultants, or industry specialists. For companies with salaried in-house instructors, Custom Fit Training dollars may be used for materials and facility rentals. This incentive subsidizes up to $250 per trainee for professional training.

Research Tax Credits

Companies doing qualified research in Utah are eligible for income tax credits of up to 6% of qualified research expenses. Qualified research expenses include:

The purchase price of machinery and equipment primarily used for conducting qualified research in Utah (provided the equipment is not exempt from sales or use taxes)
Wages paid to employees engaging in qualified research
Computers, computer equipment, and software

Sales Tax Exemption for Manufacturing Equipment

Manufacturers (SIC 2000-3999) are exempt from sales tax on the purchase of new equipment for Utah plant start-up. Replacement manufacturing equipment purchases are also exempt from sales tax.

IRB (Industrial Revenue Bonds)

Industrial Revenue Bonds are available and issued through local government entities. There is a $10 million cap per issue and a $150 million total annual state allocation cap.

Enterprise Zone Tax Credits

Companies locating or expanding in Utah Enterprise Zones may be eligible for credits on state income tax. The following counties are designated Utah Enterprise Zones:

Utah Enterprise Zones

All businesses, except construction, retail, and public utilities, are eligible for tax credits. Eligible businesses locating or expanding to Enterprise Zones may receive the following corporate income tax credits:

$750 tax credit for each new full-time position filled for at least six months during the tax year

Additional $500 tax credit if the new position pays at least 125% of the county average monthly wage for the respective industry (determined by the Utah Department of Employment Security)

Additional $750 tax credit if the new position is in a business that adds value to agricultural commodities through manufacturing or processing

Additional $200 tax credit, for two consecutive years, for each new employee insured under an employer sponsored health insurance program if the employer pays at least 50% of the premium

A tax credit of 50% of the value of a cash contribution, not to exceed $100,000, to a 501(c)(3) private, nonprofit corporation engaged primarily in community and economic development, and is accredited by the Utah Rural Development Council

A tax credit of 25% of the first $200,000 spent on rehabilitating a building which has been vacant for at least two years and is located within an enterprise zone

An annual investment tax credit of 10% of the first $250,000 in investment, and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable property

Recycling Zones

More than twenty Utah communities have been designated by the State of Utah as Recycling Market Development Zones. Businesses that collect, process, distribute, or use recycled materials in their manufacturing process can earn economic incentives by locating in these zones or by applying for the creation of a new zone. Incentives may include:

5% state tax credit on machinery and equipment
20% state tax credit of up to $2,000 on eligible operating expenses
Technical assistance from state recycling economic development professionals
Various local incentives including zoning assistance, discounted business license fees, etc.

Motion Picture Incentive Fund

Effective July 25, 2007, an approved production may receive a rebate of up to 15% on Utah expenditures, with a cap of $500,000 per project and a minimum spend the amount of $1 million in the state.