FAQ: BUSINESS DEVELOPMENT TAX CREDIT PROGRAM
What is the Business Development Tax Credit Program?
The Business Development Tax Credit (BTC) program is a performance-based, refundable income tax credit program designed to encourage business development in Wisconsin.
Why was the BTC Program created?
The new program streamlines and simplifies the Wisconsin Economic Development Corporation’s (WEDC’s) previously existing tax credit programs to better align them with the needs of the target audience–Wisconsin companies and those that may be considering locating here.
The BTC Program replaces the Economic Development Tax Credit (ETC) Program and the Jobs Tax Credit (JTC) Program. Both of these programs stopped accepting applications on Dec. 31, 2015. Tax credits approved prior to Dec. 31, 2015, will still be granted through the end date of the contracts authorizing the credits, but no new credits will be authorized through the ETC and JTC Programs.
Why were the ETC and JTC programs eliminated?
The benefits of Wisconsin’s Manufacturing and Agriculture Tax Credit have resulted in a significant reduction in the demand for Economic Development Tax Credits, which were non-refundable and therefore limited applicability to a company with little or no tax liability. The majority of businesses that previously participated in the ETC or JTC Programs now have a dramatically reduced tax liability, as a direct result of the Manufacturing and Agriculture Tax Credit.
What are the differences from a business’s perspective?
Unlike credits issued under the old ETC Program, credits issued under the new BTC Program are refundable, meaning that if a business has zero tax liability, it can receive a refund for the credit amount.
The old Economic Development Tax Credits were made transferable, so that they would still be useful to companies with little or no tax liability. Since the new Business Development Tax Credits are refundable, there is no need to be able to transfer them to another entity, so the new tax credits are not transferable.
How does the BTC Program work?
The Business Development Tax Credit Program supports job creation, capital investment, training and corporate headquarters location or retention by providing businesses located in, or relocating to, Wisconsin refundable tax credits that can help to reduce the company’s Wisconsin income/franchise tax liability or provide a refund, thereby helping to enhance the company’s cash flow to expand the project’s scope, accelerate the timing of the project or enhance payroll. Tax credits are subject to job retention requirements; for full details, see the program guidelines.
How much funding is available?
The biennial state budget includes $17 million in Business Development Tax Credits to be allocated for projects contracted during the 2016 calendar year, and $22 million for 2017. The program includes the ability to carry forward unused credits into the next calendar year. If additional demand exists, tax credits may be transferred from the Qualified New Business Venture Program into the Business Development Tax Credit Program at WEDC’s discretion, subject to approval by the Joint Finance Committee.
How can my company apply for Business Development Tax Credits?
The application process begins with contacting a WEDC regional account manager to discuss the opportunity and program eligibility. More information about the BTC Program can be found on the WEDC website.
What other tax credit programs does WEDC offer?
The Development Opportunity Zone Tax Credit Program provides non-refundable tax credits to encourage business development in the Cities of Beloit, Janesville and Kenosha. The Enterprise Zone Tax Credit Program assists Wisconsin businesses that have major expansion projects or are relocating major business operations from other states to Wisconsin. These refundable tax credits can be earned through job creation, job retention, capital investment, employee training and supply chain purchases from Wisconsin vendors. Investors in startups that are certified as a Qualified New Business Venture may qualify for Angel Investment Tax Credits and Early-Stage Seed Investment Tax Credits. Finally, the Historic Preservation Tax Credit Program encourages redevelopment of historic Wisconsin buildings that are operated as businesses—investments that preserve treasures and enhance local economies.