New tax reform law reduces North Carolina corporate tax rate to 4% and provides fiscally-responsible tax relief to all state taxpayers.
The new tax reform:
- Reduces the corporate income tax to 4% in 2016 and a 42% rate reduction since 2013.
- If the state meets revenue targets (i.e. if there is additional tax revenue growth due to a growing economy), the corporate income tax will drop to 3% in future years.
Job Development Investment Grant (JDIG):
- A discretionary incentive program of cash grants for new and expanding businesses based on job and investment commitments made by companies in their formal applications to the state prior to a location decision; not to exceed $20 million in any single calendar year. The program supports the recruitment of megasites or projects that invest at least 550M and create at least 1,750 jobs by increasing the annual JDIG cap from 20M to 35M.
One North Carolina Fund:
- A discretionary incentives tool to enable job creation or retention of competitive projects. Awards are based on jobs created, economic impact, importance to the state, quality of the industry, and environmental impact.
- Local governments are required to match One NC awards with cash, fee waivers, in-kind services, donations of land and/or buildings, or provisions of infrastructure.
- Company must agree to meet or exceed 100% of the average county wage.
One North Carolina Small Business Program:
- For companies with fewer than 100 employees the One NC Small Business Program reimburses for costs in preparing and submitting Phase I proposals for federal SBIR and STTR programs.
- One NC Phase I Matching Funds match funds awarded by grantees of federal SBIR and STTR programs.
- Sales and use tax is waived, refunded, or discounted for qualifying business activities.
- Grants offered to encourage economic growth through the productive reuse of vacant buildings.
- North Carolina's Southeast has 6 counties designated as HUBZones: Bladen, Columbus, Montgomery, Richmond, Robeson, and Scotland.
The program’s benefits for HUBZone-certified companies include:
- Competitive and sole source contracting
- 10% price evaluation preference in full and open contract competitions, as well as subcontracting opportunities.
The federal government has a goal of awarding 3% of all dollars for federal prime contracts to HUBZone-certified small business concerns.
The New Market Tax Credit program was enacted to promote community investment from individuals and companies. The credit is provided to the company or individual that makes a qualified investment with a Community Development Entity (CDE). The invested money must be used by the CDE to provide low interest loans to new business ventures within a qualified census tract.
- North Carolina bond programs allow tax-exempt bonds at 1.5-2.5 percentage points below corporate bond rates.
- North Carolina counties are annually ranked based on economic well-being by the Department of Commerce. Each of the one hundred counties are given a designation of Tier 1 (most distressed), Tier 2, or Tier 3 (least distressed) that signifies the county’s eligibility for various incentive packages. The Southeast Region has:
- 7 Tier 1 counties: Anson, Bladen, Columbus, Hoke, Montgomery, Robeson and Scotland
- 7 Tier 2 counties: Craven, Cumberland, Duplin, Lenoir, Onlsow, Sampson and Wayne
- 4 Tier 3 counties: Brunswick, Moore, New Hanover and Pender
Qualified Business Investment Tax Credits:
- Available tax credit against individual income tax for qualified investments in the equity securities or subordinated debt of a qualified business. The credit is 25% of the amount invested or $50,000 whichever is less.
- Eligibility requirements:
- Must be a Qualified Business Venture (QVB) or a Qualified Grantee Business (QGB) registered with the Secretary of State’s Securities Division.
Community Development Block Grant:
- Grants for infrastructure based on federal allocation to the state from the US Department of Housing and Urban Development that may be applied for by local governments for economic development projects.
Industrial Development Fund:
- Grants and loans for infrastructure in Tier 1 and Tier 2 counties. Local government may apply for the funds in conjunction with a company that commits to create or retain jobs in North Carolina.
- Eligibility requirements are the same as those for Article 3J Tax Credits.
- Funding cannot exceed $10,000 per new job or retained job up to a maximum of $500,000.
- Local government may grant a 4% fixed interest loan to the company for machinery, equipment, or building renovations.
Economic Infrastructure Program:
- Administered by the of North Carolina Department of Commerce and provides funding for water, sewer, publicly owned natural gas, public broadband, publicly owned access roads, and public rail spur improvements that result in private-sector job creation. Grants are based on job creation, tier status, and new job wages.
Access Road Improvements:
- Funds available through the NC Board of Transportation to construct roads to provide access to new or expanding industrial or manufacturing facilities based on a comparison of the initial number of jobs gained with the cost of the improvements.
Rail Access Program:
- Grants provided to aid in financing construction or rehabilitation of railroad access for new or expanding industry based on number of jobs and capital investment.
Foreign Trade Zones (FTZ):
- Foreign Trade Zone 214 is located in Southeastern North Carolina. An FTZ is a secured, neutral area outside of US customs territory. Items imported into an FTZ are exempt from duties and excise taxes. Merchandise may be manipulated, used in manufacturing, inspected, combined, displayed for sale, or re-exported without payment of duty. Customs duties and excise taxes are only applied on the final product if/when the product is imported into the US.