Business Tax Incentives - Some CategoriesAny business may need to pay taxes under various heads. Naturally, a business organization would like to take advantage of all the business tax incentives provided by the governments at various levels in the US. Business tax incentives include tax holidays, tax credits, tax abatements, and special treatment under corporate tax. Some categories of business tax incentives form the scope of this article. Various state governments in the US have designated certain regions as special development zones. Local governments at county level in the US have designated certain areas as tax incremental finance (TIF) districts. Within these special development zones, businesses may be eligible to claim tax credits if they either locate themselves therein or they diversify their existing business operations in them. Tax credits may be also available to companies that are set up and operate high tech businesses in zones classified as high technology. Business tax incentives may also be available to organizations that locate themselves in TIF districts and operate their businesses from there. A tax credit is a form of government provided business tax incentive that is deductible directly from the applicable gross tax. Such tax credits are generally used as a means to reduce the otherwise applicable tax liability. Unused tax credits may however be carried over to subsequent tax years so as to reduce the tax liability in those subsequent years. Such carried over tax credits are known as carryover credits. One such category of tax credit is research credit. It has two subcategories, namely R&D non-capital expenditures and investments in R&D facilities. The former is known as research credit and the other is known as research facilities credit. Another tax credit is sales tax credit related to the electricity and fuel consumption that is used in a manufacturing process. Another tax credit is that used to finance the rehabilitation of listed historical buildings. Another tax credit is that used to finance 10% of the expenditure for expansion or modernization of a dairy farm. A development zone tax credit may be available based on the number of new jobs created or those retained within the state. Certification from state or local authorities by a business is necessary to obtain this advantage. A tax credit may be available to certain businesses that invest in certain zones listed by a state or county. Tax deductions under various categories are available to certain under certain defined conditions. One of them is deduction for corporate dividends received from subsidiaries by companies, under certain defined conditions. Certain business tax incentives are available to eligible businesses in the form of exemptions. These include property tax exemptions for equipment and machinery used in manufacturing. Similarly, inventories of merchants and manufacturers are fully exempted from payment of property taxes on them. Businesses that use certain materials used in waste treatment plants are exempt from property tax payments in respect of such facilities. Various other categories that fall under business tax incentives are available to eligible businesses. |