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Delaware Direct Financial Incentives 2014

Delaware's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment.

Area Development Online Research Desk (Q1 2014)
The Delaware Strategic Fund (DSF): The Delaware Strategic Fund represents the primary funding source used by DEDO to provide customized financial assistance to businesses - for businesses considering locating in the State of Delaware, financial assistance may be provided in the form of low interest loans, grants, or other creative instruments to support the attraction of businesses that pay sustainable wages, with assistance terms that are negotiated specific to each firm's individual needs and situation. Additionally, the DSF supports the following programs:

Brownfield Assistance Program: Encourages the redevelopment of environmentally distressed sites within the state by helping to reduce related capital expenditures. DEDO administers the program in collaboration with the Department of Natural Resources and Environmental Control.

Delaware Capital Access Program (DCAP): Provides portfolio insurance to participating financial institutions enabling the financial institution to expand its small business lending. The DCAP is a private-public match program.

Delaware Rural Irrigation Program (DRIP):
Increases the quality and yield of Delaware’s crops by increasing acres of irrigated cropland in Delaware. This revolving loan fund is available to qualified Delaware farmers wishing to add new irrigation systems. DRIP is administered collaboratively through the Delaware Department of Agriculture and DEDO.

Delaware Technical Innovation Program (DTIP):
Supports businesses that have received a Phase I (SBIR/STTR) federal award and have submitted a Phase II (SBIR/STTR) application through funding transition grants which lead to innovative new products, jobs and revenue to Delaware.

State Small Business Credit Initiative (SSBCI):
This program enhances small businesses access to capital and lower interest rates. SSBCI dedicates $12.1 million to the creation of a participation program between DEDO, lending institutions and their small business clients and dedicates $1 million to the Delaware Capital Access Program.

Capital Investment: Projects that require major capital investments representing targeted industries and creating new jobs with sustainable wages and benefits may qualify for cash incentives to offset major capital investments that are necessary for the new business expansion. The terms are negotiated specific to each firm’s individual needs and situation with a maximum limit of 3% of Capital Expenditures.

Workforce Training Grants: We realize that companies often have a need for specialized training. The Delaware Economic Development Office can offer matching training grants for customized training for up to $100,000 per qualified project. The matching portion of the grant can be an in-kind contribution while training is customized to the company’s specific needs. The workforce training grant can be used for various training initiatives through-out the year ranging from entry level to front-line supervisory training.

Workforce Recruitment: With Delaware’s skilled workforce, your company will staff its new facility with a team eager to support your success. To assist in the hiring process, the Delaware Economic Development Office will coordinate recruitment efforts with the Department of Labor to ensure your employment needs are met or exceeded.

National Emergency Grants: The Delaware Economic Development Office (DEDO) and the Delaware Department of Labor, Division of Employment and Training (DOL/DET) are working collaboratively to assist Delaware companies with funds made available through the National Emergency Grant (NEG). These funds are granted by the US Department of Labor in order to temporarily expand the services that the State is able to provide in times of emergency. They can be granted to the State to help provide services to affected workers from large layoffs, plant/business closures, or natural disasters and provides funding to train workers who have been unemployed for greater than 23 weeks.

Tax Credits/Rebates for Qualifying New Business Entities: Eligibility and Administration managed by Delaware Division of Revenue

New Business Facility Corporate Income Tax Credit: Corporate Income Tax: Any eligible corporate taxpayer that makes a qualified investment ($200,000 or more) and that hires five or more qualified employees ($40,000 per employee) is entitled to receive a tax credit. Eligible corporations receive credits of $500 for each qualified employee and $500 for each $100,000 invested, not to exceed fifty percent of their tax liability in a given year. Unused credits may be carried forward. The credits can be taken each year over a ten year span but may not exceed 50% of the company’s pre-credit tax liability. This tax credit program was previously referred to as the Blue Collar Tax Credit. http://revenue.delaware.gov/services/Business_Tax/FullBC.shtml For a $20,000,000, the 10 year credit could be $150,000 (100x500+20,000,000/100,000x500). If the investment is in a targeted area, you substitute $750 for the $500, so the credits would be 50%higher in each scenario noted above. The $150,000 would increase to $225,000.

Alternative Investment Credit Required for Telecommunications Services [1] & Banking [2]: Instead of five employees and $40,000 of investment per employee (as mentioned in the New Business Facility Corporate Income Tax Credit), telecommunication service businesses are required to hire at least 50 qualified employees and make a minimum investment of $15,000 per qualified employee. Telecommunication service businesses meeting these criteria are entitled to a $500 tax credit for each qualified employee hired and a $500 credit for each $100,000 in qualified investment made. Tax credits earned by banks are used to reduce their liability under the bank franchise tax. Like telecommunication services, banks must also increase employment by a minimum of 50 employees and make a minimum investment of $15,000 per qualified employee. Unlike telecommunications services, however, there is no tax credit for each $100,000 of investment. Furthermore, only full-time employees receiving health insurance benefits are counted when calculating the $500 credit (per qualified employee). [1] 30 Del. C., Chapter 20, section 2011(b)(3)
[2] Del. C., Chapter 11, section 1105(d)-(f)

Gross Receipts Tax Credit: Businesses may also be eligible for the he Gross Receipts tax credit. The credit is offered over a ten-year horizon. It is not a credit based on jobs and/or investment; it’s just a straight reduction.

Public Utility Tax Credit: Any firm that is eligible for tax credits under the Blue Collar Jobs Act (as defined under Title 30, Section 2011(a)) is also entitled to receive for five years a rebate of 50 percent of the public utility tax that it owes on the operation of new or expanded enterprise.

Another alternative refundable tax credit that is available through Delaware Division of Revenue is the New Economy Jobs Credit. However, it is important to note that each business entity will have to choose which tax credit will be most beneficial for their business as they must select either the New Business Facility Tax Credit or the New Economy Jobs Tax Credit.

New Economy Jobs Refundable Tax Credit: The New Economy Jobs program allows employers to obtain up to a 65% rebate on the withholding taxes for their new Delaware taxpayers. Delaware firms may apply to Delaware Division of Revenue for potential eligibility of the New Economy Jobs Refundable Tax Credit. This program requires a company to create a minimum of 50 jobs with each qualifying position paying a salary equal to or greater than $108,487 in 2012. In addition to the salary requirement, the eligible employee must be a new tax payer to the State of Delaware. New Economy Jobs Tax Credits are not transferable. Tax credits must be applied for annually, after initial certification, and will be adjusted to reflect the actual of number of employees that qualify each year. On August 13, 2012, Governor Markell signed into law an Act to expand the New Economy Jobs Program by creating another means by which employers relocating jobs to Delaware may qualify for the tax credit. Under this Act, employers that relocate at least 200 jobs to Delaware will be entitled to a tax credit equal to 25% of the withholding paid by the employer on behalf of the relocated employees. If employers relocate more than 200 jobs, the size of the tax credit increases and can reach 40% if the employer relocates 500 or more employees. The Act also maintains incentives for relocating jobs into municipalities, targeted growth areas and counties, and on to redeveloped brownfields. Altogether, the maximum tax credit can reach 65% of the withholding paid on behalf of the relocated employees.

Business Finder’s Fee Tax Credit: The Business Finder's Fee (BFF) Tax Credit is designed to incentivize existing Delaware businesses to leverage their relationships with suppliers, customers and other businesses to relocate to Delaware, resulting in job creation, increased revenues and stronger supply networks. Both the existing Delaware company (Sponsor Firm) and the new relocating business (New Business Firm) shall be eligible for a tax credit equal to $500 multiplied by the number of full-time Delaware employees of the New Business firm each tax year for 3 years following the date in which the New Business Firm is certified in Delaware.

Work Opportunity Tax Credit (WOTC) Federal Program: The WOTC is an employer credit designed to help move people from welfare into gainful employment and obtain on-the-job experience. The credit for the employer can be as much as:$2,400 for each new adult hire; $1,200 for each new summer youth hire; $4,800 for a veteran entitled to compensation for a service-connected disability; $9,000 for each new long-term family assistance recipient hired over a two-year period.

Research & Development Tax Credits:
Delaware research and development credits provide for up to $5 million in Delaware research and development tax credits to all Delaware taxpayers for qualified research and development expenses in a taxable year. The credit is equal to (a) 10 percent of the excess of the taxpayer's total Delaware qualified research and development over its base amount, or (b) 50 percent of Delaware's apportioned share of the taxpayer's federal research and development tax credits, with modifications. In no year may the Delaware research and development tax credits exceed 50 percent of the taxpayer's qualified tax liability. Unused credits may be carried forward.

State of Delaware Contact:
Alan B. Levin
Cabinet Secretary
Delaware Economic Development Office
99 Kings Highway
Dover, DE 19901
(302) 739-4271

Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.

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