Industrial manufacturing businesses are constantly looking for ways to reduce costs, increase profits and invest in new equipment or facilities. Fortunately, many states offer various tax credits and incentives to help companies achieve business goals and thus stimulate economic growth within their states by offering tax subsidies.
In addition to the typical credits related to investment and job creation, below are five valuable tax credits available to businesses operating within the manufacturing industry.
Refundable Credit
Louisiana Ad Valorem Credit
Louisiana provides a tax credit against the Corporate Income and Franchise Tax to manufacturers, distributors and retailers equal to 100% of the property tax paid on inventory. For most taxpayers, the credit is refundable for businesses that have less than $500,000 in annual property taxes. The credit is not refundable for taxpayers receiving the industrial tax exemption. Excess credits may be carried forward five years. The carryforward period is extended to ten years for a credit against the personal income tax. Credit is also available for property taxes paid on natural gas used in a natural gas storage facility.
Credit Carryforward Allowed
Mississippi Inventory Property Tax Credit
Mississippi offers a tax credit against the Corporate Income Tax to manufacturers, distributors, wholesalers and retailers equal to 100% of the property taxes paid on inventory. The credit also applies to property taxes paid on rental equipment. Excess credits may be carried forward five years.
No Credit Carryforward
Kentucky Inventory Property Tax Credit
Kentucky provides a tax credit against Corporate Income Tax and Limited Liability Entity Tax for all taxpayers who paid property taxes on business inventory. The credit is 75% of the property taxes paid for the 2020 tax year and 100% of the property taxes paid for tax years beginning after 2020. The property taxes must be timely paid to qualify for the credit. Excess credits are not refundable and cannot be carried forward.
West Virginia Manufacturing Property Tax Adjustment
West Virginia provides a tax credit against the Corporation Income and Franchise Tax to manufacturers, equal to 100% of the property taxes paid on inventory. Excess credits are not refundable and cannot be carried forward.
New York Real Property Tax Credit
New York offers a tax credit against the Corporate Franchise Tax and Personal Income Tax, equal to 20% of the property taxes paid for real property owned by qualified manufacturers in New York and principally used for manufacturing. The credit may also be available to lessees. Qualified manufacturers must have at least 50% of manufacturing receipts and either all or at least $1 million of manufacturing property in New York. Excess credits are not refundable and cannot be carried forward.
Your Guide Forward
Cherry Bekaert’s tax advisory professionals have fostered strong relationships with state economic development agencies as well as state and local governments to stay on top of legislative amendments. If you have industrial manufacturing operations in any of these states, please contact our State Credits & Incentives team for a comprehensive review to help you take advantage of these credits and incentives opportunities.
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