Economic Development Tax Credit

The Economic Development Tax Credit replaces five former Wisconsin tax credit programs - the Airport Development Zone, Agricultural Development Zone, Community Development Zone, Enterprise Development Zone and Technology Zone programs.  The new tax credit program eliminates all former zone boundaries, as well as creating new ways in which existing Wisconsin businesses or businesses relocating to Wisconsin can earn tax credits.

The tax credits, which are nonrefundable and nontransferable, must be applied against a certified business's Wisconsin income tax liability.  In the case of an S-Corporation, LLC or other pass-through entity, tax credits flow through to the owners in the same way as the income.  The tax credits have a 15-year carryforward.

Eligible Activities

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Statute  Administrative Rules

• Job Creation  –  Tax credits can be earned through the creation of new, full-time positions that pay at least $10.88 per hour.  Businesses must create the jobs within three years and maintain them for at least two additional years.  Tax credits will be released on an annual basis, in direct proportion to the number of jobs created.
  
  
• Capital investment  –  Tax credits may be earned through capital investment for property and equipment.  Expenditures for working capital, employment costs, moving costs, intellectual property and unrelated fees and permits are not eligible.  Tax credits will be released on an annual basis, as eligible expenditures take place.  Businesses whose primary activity includes such things as retail, commercial development, recreation, entertainment or direct health care are not eligible to earn tax credits through capital investment.

• Employee Training  –  Tax credits may be earned through many types of training provided to existing and new employees in full-time positions.  Training must be related to a specific project.  Eligible training costs include trainee wages, trainer costs and trainer materials.  Tax credits will be released on an annual basis, as eligible training costs are incurred.

• Corporate Headquarters  –  Tax credits may be earned by businesses locating global, national divisional or regional headquarters operations to Wisconsin or by businesses whose existing Wisconsin headquarters are at risk of leaving the state.  Credits will be allocated on a per-job basis.

Allocation of Tax Credits

Commerce will certify applicants that have met the eligibility criteria and will allocate tax credits.  In determining the allocation of tax credits, the Department will consider the following:

1. Whether the project will serve a public purpose;
2. Whether the project might not occur without the allocation of tax credits;
3. The extent to which the project will be financed with funds not provided by the State of Wisconsin;
4. Whether the project will displace workers in Wisconsin;
5. The extent to which the project will retain or increase employment in Wisconsin;
6. The extent to which the project will contribute to the economic growth of Wisconsin and to the well-being of Wisconsin residents;
7. Whether the project will be located in an economically distressed area;
8. Whether the project will be located in a rural area;
9. The extent to which the project will increase the geographic diversity of available tax benefits throughout Wisconsin;
10. The financial soundness of the business;
11. The ability of the business to utilize Wisconsin income tax credits; and
12. Any previous financial assistance that the business received from the Wisconsin Department of Commerce.