Cumberland Empowerment Zone Corporation
Tax Incentive Programs

Empowerment Zone businesses are eligible for several tax incentives. The Empowerment Zone tax incentives are designed to encourage businesses to operate within the Zone and to hire local residents. Incentives include employment credits, low-interest loans through EZ facility bonds, and reduced taxation on capital gains.

Tax Incentives

Empowerment Zone Employment Credit allows Empowerment Zone businesses to take a credit against federal taxes of up to $3,000 for each year of Empowerment Zone designation for every existing employee and new hire that lives and works in the Empowerment Zone.

Work Opportunity Tax Credit allows businesses to take a credit up to $2,400 against federal taxes for each new hire from groups that have high unemployment rates or other special employment needs, including: youth ages 18 to 24, who live in an Empowerment Zone, and summer hires ages 16 to 17 who live in an Empowerment Zone.

Welfare to Work Tax Credit allows businesses that hire long-term family assistance recipients to take a two-year credit against federal taxes. Credits are up to $3,500 for the first year, and $5,000 for the second year for each new hire.

Tax-Exempt Bonding

Empowerment Zone Facility Bonds provide businesses with access to $130 million in tax-exempt facility bonds. The bonds can be utilized for property and equipment purchase, new construction and/or renovations. The $10 million cap on project expenditures is not applicable to Empowerment Zone bonds and the bonds can be used for activities beyond manufacturing. Bond projects must be located within the Zone and a business must hire at least 35% of its employees from the Zone. Tax-exempt financing is typically three to four percentage points lower than conventional financing.

Tax Deductions

Section 179 of the tax code allows businesses to choose to deduct all or part of certain qualifying property in the year they place it in service. The increased section 179 deduction allows businesses located within the Zone to increase their IRS 179 tax deduction by as much as $35,000.

For more tax incentive information visit www.hud.gov.