Delaware: Basic Business Taxes 2011
Delaware's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include license and use taxes, property taxes, and corporate income tax.
Area Development Research Desk (March 2011)
(page 2 of 2)
Targeted Areas Tax Incentives:
Targeted industries (identified above) investing in targeted areas for economic development receive additional corporate income tax credits and gross receipts reductions. Commercial firms investing in targeted areas receive both corporate income tax credits and gross receipts tax deductions.
Retention and Expansion Tax Credits:
Corporate income tax credits and gross receipts tax reductions are available for those qualifying manufacturers and wholesalers expanding their asset base without expanding their employment. Such companies investing a minimum of $1 million or 15 percent of the unadjusted basis in the facility are eligible to receive 75 percent of blue-collar tax credits. Wages cannot fall below 85 percent of the total wages for the period 12 months prior to the opening of a new facility. The maximum annual credit cannot exceed $500,000. Gross receipts tax reductions are limited to a maximum total credit of $500,000 over the 10-year life.
Green Industries Tax Credits:
Waste reductions - Manufacturers who reduce their chemical waste reported under the Toxics Release Inventory by 20 percent or their other waste by 50 percent are granted a $400 corporate income tax credit for each 10 percent reduction. Credits will be provided over a five-year period.
Eligible firms include: (a) manufacturers whose production inputs are comprised of at least 25 percent recycled materials; (b) firms that engage in the processing of materials removed from Delaware's solid waste stream for resale as input to manufacturers; and (c) firms that collect and distribute recycled materials, and/or materials removed from Delaware's solid waste stream for the purpose of recycling. In addition, eligible firms must meet the investment and employment criteria listed under targeted industry tax incentives.
Qualifying firms receive a $400 corporate income tax credit, in addition to credits offered under the targeted industry tax incentives, per employee and per $100,000 investment. These firms also qualify for the 10-year gross receipts tax reductions.
Investment Tax Incentive:
A deduction from corporate gross income in determining the corporate income tax is available for the amount of investment by a business in an approved neighborhood assistance program. The tax credit is 50 percent of the amount invested by a business firm in a program, and may not exceed $100,000 per business.
There is no property tax on business inventories.
Goods in Transit:
Goods sold out of state by a wholesaler with no Delaware outlet are exempt from the tax on gross receipts.
Industrial Machinery and Equipment:
Industrial machinery and equipment are not taxed.
Research and Development Credit:
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.
Delaware State Contact:
Economic Development Director
Delaware Economic Development Office
99 Kings Highway
Dover, DE 19901
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.