Walworth County Economic Development Alliance [WCEDA]

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State Tax Incentives

Expand, Relocate, Create Jobs     

Manufacturing & Agriculture     

Property Tax     

Invest 

R&D 

Special Incentives     

WHEDA 

CRF

 

The Wisconsing Economic Development Corporation (WEDC) has a host of tax credits that are available to help new, relocating, and expanding businesses.  These credits are flexible and can be allocated to help increase jobs in the state.  New legislation has made these credits more viable for all business structures.  For more information on what is currently available and how these tax credits can help your business, contact This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it. , the economic development coordinator for the M7 region.

 

Wisconsin Department of Revenue

 

Expand, Relocate, Create Jobs

Job Creation Deduction- The subtraction from federal income is equal to $2,000 per eligible employee for businesses with gross receipts of greater than $5 million or  $4,000 per eligible employee for businesses with gross receipts of $5 million or less.  To qualify for the 2011 Wisconsin jobs creation deduction, you must meet all of the following conditions:

  • The employer must increase the number of full-time equivalent employees  employed in Wisconsin during the taxable year
  • The employer can be an existing business or a new business
  • The  2011  business relocation credit or deduction cannot also be claimed

Relocated Business Tax Credit or Deduction- A corporation or tax exempt corporation may claim the relocated business credit. An individual, estate, trust, partnership, or limited liability company (LLC) may claim the relocated business deduction.  To qualify for the Wisconsin relocated business credit or deduction, you must meet the following conditions: 

  • The claimant must locate to Wisconsin from another state or country and begin doing business in Wisconsin during the taxable year. 
  • The claimant must not have done business in Wisconsin during the two taxable years preceding the first taxable year the credit or deduction is allowed

Jobs Tax Credit- An individual, estate, trust, partnership, limited liability company (LLC), corporation, or tax exempt corporation that is certified by the  Wisconsin Economic Development Corporation may claim the credit. Partnerships, LLCs treated as partnerships, and tax option S-corporations cannot claim the credit; however, the credit  computed by those business entities can pass through to the partners, members, or shareholders. To qualify for the Wisconsin Jobs Tax Credit, you must meet all of the following conditions:

  • The Wisconsin Economic Development Corporation must certify that the claimant is operating or intends to operate a business in Wisconsin and that a contract has been entered into  with the Wisconsin Economic Development Corporation. 
  • The claimant has received from the Wisconsin Economic Development Corporation a  notice of eligibility to receive tax benefits that reports the amount of tax benefit for which the claimant is eligible.

Manufacturing & Agriculture

Domestic Production Activities Deduction- An individual, estate, trust, limited liability company (LLC),  corporation,  or tax exempt corporation may claim the qualified production activities credit. Partnerships, LLCs, LLCs treated as partnerships, and tax option S-corporations cannot claim the credit; however, the credit computed by those business entities can pass through to the partners, members, or shareholders. To qualify for  the Wisconsin qualified production activities credit, you must meet the following conditions:

  • The claimant must derive qualified production activities income from property in Wisconsin that is assessed as manufacturing property  under s. 70.995  or agricultural property under s. 70.32(2)(a)4, Wis. Stats. 
  • The  qualified production activities income must consist of income defined in 26 USC 199(c) of the Internal Revenue Code, as modified for Wisconsin.

Property Tax Exemption for Manufacturing Machinery and Equipment- Under sec. 70.11(27)(b), Wis. Stats., “machinery and specific processing equipment; and repair parts, replacement machines, safety attachments and special foundations for that machinery and equipment; that are used exclusively and directly in the production process in manufacturing tangible personal property, regardless of their attachment to real property, but not including buildings” are exempt from property tax. To qualify for the machinery and equipment (M&E) exemption, a business must first be classified as “manufacturing.”

Wisconsin Dairy and Livestock Farm Investment Credit- The Wisconsin Dairy and Livestock Farm Investment Credit is a nonrefundable credit equal to 10% of the amount the claimant paid in the taxable year for dairy or livestock farm modernization or expansion related to the operation of the claimant’s dairy or livestock farm. The aggregate amount of credits that a claimant may claim is $75,000. The credit must be claimed within four years of the unextended due date of the tax return.

Wisconsin Dairy Manufacturing Facility Investment Credit- The dairy manufacturing facility investment credit is a refundable credit for taxpayers who have invested to modernize or expand dairy manufacturing facilities in Wisconsin and have been certified by either the Wisconsin Department of Commerce (DOC) for the period January 1, 2011 - June 30, 2011, or on or after July 1, 2011, the Department of Agriculture, Trade and Consumer Protection (DATCP).

Farmland Preservation Credit- Beginning in tax year 2010, a refundable per-acre farmland preservation credit is available under which a claimant may claim as a credit against income taxes an amount calculated by multiplying the claimant’s qualifying acres by one of the following amounts:$10 if the qualifying acres are located in a farmland preservation zoning district and are also subject to a farmland preservation agreement that is entered into after the budget’s effective date; $7.50 if the qualifying acres are located in a farmland preservation zoning district but are not subject to a farmland preservation agreement that is entered into after the budget’s effective date; or $5 if the qualifying acres are subject to a farmland preservation agreement that is entered into after the budget’s effective date but are not located in a farmland preservation zoning district.

Meat Processing Facility Investment Credit- Any individual, estate, trust, partnership, limited liability company (LLC), corporation, or tax-exempt organization that has invested in modernizing or expanding a meat processing facility in Wisconsin and is certified by the Department of Commerce may be eligible. Tax-option (S) corporations, partnerships, and LLCs treated as partnerships cannot claim the credit at the entity level . However, the credit attributable to the entity’s business operations passes through to the entity’s shareholders, partners, or members .The maximum meat processing facility investment credit available to all claimants for taxable years beginning in 2010 and thereafter is $700,000.

Exemption for Fuel and Electricity Consumed in Manufacturing- Wisconsin does not require that a manufacturer purchase a third party utility usage study to determine the percentage of fuel or electricity that is consumed in manufacturing and that qualifies for exemption. However, the purchaser/manufacturer is responsible for providing documentation to support the exempt percentage claimed and a third party utility usage study is good supporting evidence to prove how they arrived at the amount of fuel and electricity consumed in manufacturing.

One thing to remember when claiming an exemption is that it is up to the taxpayer to prove that a sale or purchase qualifies for a particular exemption. Therefore, regardless of the method you choose to determine the amount of fuel or electricity that qualifies for exemption, you will need documentation to support the method chosen and evidence (such as a detailed analysis of your energy consumption) to prove that this method is reasonable in your particular situation. The method you choose is also subject to review in the event that you are audited.

Property Tax

Waste Treatment Facilities Exemption- All property (land, land improvements, buildings, machinery) purchased or constructed as a waste treatment facility used for the treatment of industrial wastes or air contaminants for the purpose of abating or eliminating pollution of surface waters, the air, or waters of Wisconsin qualify for the Waste Treatment Facilities Exemption.

Computer Equipment Exemption- Beginning with the 1999 assessment, Wisconsin Statutes Section 70.11(39) exempts computers, software, and electronic peripheral equipment from property taxation. These items must be reported by the property owner on Schedule D-1 of the Personal Property Return for compilation by the assessor. NOTE:  Do Not Report Custom Software in Schedule D-1 of the Statement of Personal Property.  *These items are frequently assessed as manufacturing personal property.

Invest in Wisconsin Business

Deferral and Exclusions of Long-Term Capital Gains for Investments in Wisconsin Business- A “qualified new business venture” is a business certified by the Department of Commerce or WEDC. A business may be certified, and maintain such certification, only if the business is engaged in developing a new product or business process or manufacturing, agriculture, or processing or assembling products and conducting research and development.  Certain conditions must be met in order to qualify for the deferral of gain:

  • The long-term gain must be deposited in a segregated account in a financial institution. “Financial institution” means any bank, savings bank, savings and loan association, or credit union that is authorized to do business under state or federal laws relating to financial institutions. 
  • Within 180 days after the sale of the asset that generated the gain, all of the proceeds in the account must be invested in a “qualified new business venture” or a “qualified Wisconsin business.” Both the “qualified new business.

Angel Investment Credit and Early Stage Seed Investment Credit- Angel investors and angel investor networks that invest in Qualified New Business Ventures may be eligible to claim an income tax credit on that investment, up to 25% of the investment amount. To be certified as a qualified new business venture, a company must meet certain requirements, including the following: 

  • Have its headquarters in Wisconsin. 
  • Have less than 100 employees, at least 51% of whom are employed in Wisconsin. 
  • Have the potential for increasing jobs in this state, increasing capital investment in this state.

Venture Capital Tax Credits: Venture Capital Funds that are certified by the Department of Commerce and that invest in Qualified New Business Ventures may be eligible to claim up to a 25% income tax credit on that investment.

Postsecondary Education CreditA credit is available equal to 25 percent of the tuition paid or incurred for an education program in a qualified postsecondary institution if the individual was eligible for a grant from the Federal Pell Grant Program.  A credit is available equal to 30 percent of the tuition paid or incurred if the individual was enrolled in a course that relates to a projected worker shortage in this state and if the individual was eligible for a grant from the Federal Pell Grant Program.

Research and Development Credits

Basic Research Credit- The research expense credit provides an incentive to corporations for increasing qualified research activities in Wisconsin. The credit equals 5 percent of the difference between the claimant’s qualified research expenses for research conducted in Wisconsin and its Wisconsin base amount.

Super Research and Development Credit- For taxable years beginning on or after January 1, 2011, a credit is available to corporations equal to the amount of qualified research expenses paid or incurred by the corporation for research conducted in Wisconsin that exceeds the amount calculated by averaging the qualified research expenses paid or incurred in the 3 taxable years immediately preceding the taxable year for which a credit is claimed, multiplied by 1.25.

Research Facilities Credit- A credit is available to corporations equal to 5 percent of the amount paid or incurred by the corporation during the taxable year to construct and equip new facilities or expand existing facilities used in this state for qualified research. Eligible amounts only include amounts paid or incurred for tangible, depreciable property and do not include amount paid or incurred for replacement property.

Engine Research Credit- Credit is available to corporations equal to 10 percent of the amount paid or incurred to construct and equip new facilities or expand existing facilities, except replacement property, used in this state for qualified research relating to designing internal combustion engines for vehicles, designing vehicles powered by internal combustion engines, and improving production processes for internal combustion engines and vehicles. In addition, credit is available for designing and manufacturing energy efficient lighting systems, building automation and control systems, or automotive batteries for use in hybrid electric vehicles that reduce the demand for natural gas or electricity or improve the efficiency of its use.

Other Special Incentives

Tax Exemption for Manufactured Modular Homes- Section 77.54(5)(am), Wis. Stats., as created by 2011 Wis. Act 32, effective September 1, 2011, creates an exemption from Wisconsin sales and use tax for “Modular homes, as defined in s. 101.71 (6), and manufactured homes, as defined in s. 101.91 (2), that are used in real property construction activities outside this state.”  Effective September 1, 2011 and thereafter, a manufactured or modular home dealer who purchases a manufactured or modular home in Wisconsin and who subsequently uses that manufactured or modular home in a real property construction activity outside Wisconsin, may purchase that manufactured or modular home without Wisconsin sales or use tax.

Electronic Medical Records Credit- For tax years beginning after December 31, 2011, the credit is equal to 50% of the amount a health care provider paid in the taxable year for information technology hardware or software that is used to maintain medical records in electronic form.

Technology Zones Credit- Promotes investment in high-technology businesses in a technology zone for taxable years beginning on or after January 1, 2002.

State Supplement to Federal Historic Rehabilitation Credit- Equals 5% of the qualifying costs to rehabilitate certified historic structures located in Wisconsin and used for business purposes if the work begins after December 31, 1988, and the rehabilitated property is placed in service after June 30, 1989.

Community Development Finance Credit- A credit is available for corporations making a contribution to the Wisconsin Housing and Economic Development Authority and in the same year purchasing common stock or a partnership interest in the Community Development Finance Company. The credit amount is equal to 75% of the purchase price of the stock or of the partnership interest, but cannot exceed 75% of the amount of the contribution. For taxable years beginning after July 1, 2011, a credit is available for 5 percent of the amount the claimant paid in the taxable year to a community rehabilitation program to perform work for the claimant’s business.

Community Rehabilitation Program Credit- For taxable years beginning after July 1, 2011, a credit is available for 5 percent of the amount the claimant paid in the taxable year to a community rehabilitation program to perform work for the claimant’s business.

Tax Incremental Finance (TIF)- The Tax Incremental Finance Law (TIF) was approved by the Wisconsin Legislature as a financial tool municipalities could use to promote tax base expansion.  Depending on the type of Tax Increment District (TID) the targets range from eliminating blight, rehabilitation and conservation, promoting industrial development or mixed-use, environmental remediation or specific projects that promote agricultural, forestry, manufacturing and tourism in towns as classified in the North American Industry Classification System, 1997 edition. TIF is a finance tool for tax base expansion.  Benefits may also come in the form of increased employment, an improved business climate, and elimination of unsafe or unsightly areas.

 

Wisconsin Housing and 
Economic Development Authority

New Markets Tax Credits : The New Markets Tax Credit program was originated by Congress in 2000 as a way to promote economic development in low-income communities.  The program provides tax incentives to investors who make equity investments in rural and urban low-income communities.  Since 2004, the Wisconsin Community Development Legacy Fund has received four allocations of New Markets Tax Credits totaling $405 million.

Community Reinvestment Fund

New Markets Tax Credit: Takeout of short term construction debt or permanent financing for businesses (including non-profit businesses) seeking to purchase, construct (new or expansion), or rehabilitate buildings occupied by the businesses. Also may be used for the financing of major business equipment with a minimum useful life of 5 years. Refinancing of existing debt is not a permitted use of the funds.

 

Loans & Guarantees     

Grants & Bonds

 

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