How Can My Business Get Tax Incentives?

Once you know what tax incentives are, you might be more interested.  But there is still the question of how can my business get tax incentives?  The short answer is that businesses must meet the requirements from the government to get tax incentives.  Requirements are unique to the incentive purpose, but here are some common ones.

Business must be in certain industries. 

It is in the governments interest to encourage business in certain industries like Agriculture, pharmaceuticals, manufacturing, engineering, aeronautics and technology. Currently, tax incentives across US industries resulted in a reduction of $94,056,572 on a $358,916,354 total tax bill.  The manufacturing industry enjoyed a $37,384,236 reduction on a $115,469,502 tax bill, approximately a 33% discount. 

To encourage certain industries high in job provision and other national benefits, there are a plethora of incentives.  We are listing only a few of the options here. 

To find out more about surprising ways Americore can help your business improve your return on investment, contact us.

Accelerated Machinery and Equipment Depreciation Deduction. 

This deduction allows business owners to deduct their machinery and equipment’s depreciation value immediately.  By allowing the full amount immediately, it essentially gives businesses financial room to invest in equipment and machines for their factories.  In less than a year, the firm will recoup the savings on tax liabilities.

Graduated Corporate Income Credit

This tax return credit offers tax relief or businesses that earn high profits, so the owners can put more of that profit back into their companies.  In the graduated Corporate Income credit, the first $50,000 of a business income is taxed at 14%, graduating to 35% for income over $350,000. 

Creating a Number of Jobs

Domestic Manufacturing Deduction.  This deduction is designed to encourage US companies to retain domestic production jobs instead of outsourcing to an overseas factory.  If an American business manufactures products on US soil, it is likely to be eligible for this deduction.

R&D Tax Credits

The R&D Tax Credit is a misunderstood program.  You might think it would have stringent requirements, but the qualifiers are broad and accepting.  For businesses savvy enough to take advantage of it, the R&D Tax Credit can save substantial money.  There are four steps to the eligibility test for the R&D Tax Credit. 

• You need to show that you attempted to eliminate the uncertainty about development or improvement of the product or process. This must be on a fundamental level, and not reflect mere cosmetic changes.
• You must be able to demonstrate there is a process of experimentation, with simulations, modeling or testing.
• Your endeavors must be science or engineering based.
• There must be some measurable improvement in quality, reliability or performance.

Confused?  OK, here are some examples of areas of eligible innovations: software development, tool design, patents, environmental testing, automated manufacturing processes.

The differences between tax incentive programs is wide and full of misunderstandings. Some incentive plan requirements are stringent and others much more accommodating.  That’s why having a business advisory firm to guide you to the programs that best apply to your business can make a world of difference.  Americore professionals go further.  Americore guides your team through the application process.  We’d love to tell you more about Blue Apple Savings that make sense for your business.  Contact us  today to start the conversation.