This program provides quarterly cash payments to a qualifying company of a percentage, not to exceed five percent, of newly created gross taxable payroll. The company must enter into a contract with the Oklahoma Department of Commerce before it may receive any payments based on salaries of any new direct jobs. Payments are made quarterly for three years and if thresholds are achieved, they may extend for an additional seven years. A qualified company must achieve a $2.5 million annualized payroll for the new full-time employees for any four consecutive quarters during its first 12 quarters in the program. If this payroll amount is not achieved payments cease.
All businesses must offer basic health insurance coverage to all employees whose pay is included in the payroll figures for qualification. Employees must be allowed access to the coverage within 180 days of employment. Eighty percent of employees whose pay is included in the new payroll must work at least 30 hours per week. Currently, wage requirements do not exceed $31,297 in any county regardless of average wage. The wage amounts, including the maximum wage, are adjusted annually. The minimum wage requirements do not apply to Opportunity Zones.
Legislation enacted in the 2013 added the following provisions to the Quality Jobs Program. These provisions take effect November 1st, 2013:
• NAICS additions for Ecosystems to Quality Jobs Program
The Oklahoma Department of Commerce identified five ecosystems in which the state has a competitive advantage, the jobs have relatively high wages and the industries in the ecosystems have growth potential. The NAICS additions of industries within the Information & Financial Services, Transportation & Distribution, and Energy/Transportation & Distribution ecosystems to the Quality jobs program will help the state maintain a competitive advantage in these industries and attract and promote growth for companies that demand higher skill employment.
• Veterans Inclusion
Many industries, particularly in aerospace and defense which are part of Oklahoma’s economic engine, pay higher than average wages and also employ a high percentage of veterans. An incentive that rewards companies for investing in a veteran labor force would increase the competitiveness of the state to attract expansion and location of new jobs. By effect, this would increase the number of jobs available for and supportive of veterans.
• Clawback Provision
The Quality Jobs statute did not contain language that holds accountable a company that lacks good faith intent to invest in the state yet proceeds with a Quality Jobs application and contract. Including a clawback provision in the statutes could not only discourage companies with no interest in Oklahoma’s fiscal security, but also increase public and legislative trust in the Quality Jobs Program by ensuring accountability and stewardship of public resources.
• Waiting Period for companies Dismissed from the Quality Jobs Program Dismissal
Introducing a waiting period for companies that have been dismissed from the Quality Jobs Program will prevent abuse of the program by companies that have had a history of not making the payroll threshold in the past.
A lower annualized payroll threshold of $1.5 million may apply to some additional applicants including food processors with 75 percent out-of-state sales; firms performing research, development, and testing services; auxiliary research and development labs of large enterprises; and firms that locate on certain former military bases.
Small Employer Quality Jobs Program:
This program provides annual cash payments to a qualifying company. The payments may be for as much as five percent of new taxable payroll, for up to seven years. Qualifying payroll must be attributable to annual salaries that are at least 110 percent to 125 percent of the average wage of the county in which the jobs are located. Legislation enacted in 2006 allows companies located in certain economically challenged counties to qualify for the program at an average county wage level of 100%.
Generally companies locating in metropolitan counties will not qualify unless they locate in specified areas according to census data. Life Science Research and Development Companies and Testing Laboratories may locate anywhere and still qualify. Health premiums paid by the company may be added to the base salaries to determine the total compensation for the average wage amount. Basic health insurance must be offered to new employees within 12 months, and at least 50 percent of the cost must be paid by employer. At least five, and possibly as many as 15, new employees must be added in the first 12 months after the contract start date.
Companies in the basic industries of R&D, Testing Labs and some Computer/Data Processing related services have 36 months to add the required amount of new jobs. Companies must be a basic industry as listed in the Quality Jobs Program, except companies engaged in mining of oil and gas may not participate. All qualified businesses must make at least 75 percent of annual sales to out-of-state customers, to in-state customers if resold to an out-of-state consumer, or to the federal government. Life Science Research and Development Companies and Testing Laboratories are exempt from this requirement.
Distribution centers for a larger operation are required to distribute 40 percent of their inventory out-of-state. Qualified companies may not have had more than 90 existing employees for the 12 months prior to the time of application. Companies that have received incentive payments under any other state Quality Jobs Program may not participate in this program. Companies benefiting from the Rural Economic Development Loan Act may not access this program. Companies contracting for this program are also prohibited from taking the investment/new jobs income tax credit, construction sales tax refunds, and other tax benefits. The Oklahoma Department of Commerce determines eligibility.
The 21st Century Quality Jobs Program:
This new incentive was created in 2009 to attract growth industries and sectors to Oklahoma in the 21st Century through a policy of rewarding businesses with a highly skilled, knowledge-based workforce.
The first of its kind, this incentive reduces out-of-state sales requirements from 75% to 50% for industries that are required to have out-of-state sales and requires only 10 full-time jobs at an annual wage of the lesser of $102,300 or 300% of the county’s average wage. It also maximizes the eligible incentive payment by incorporating expanded state benefits by allowing a net benefit rate of up to 10% of payroll.
- Requires at least 10 full-time jobs at an annual average wage of the lesser of $102,300 or 300% of the county’s average wage
- Allows a net benefit rate of up to 10% of payroll for up to 10 years
- Out-of-state sales must be at least 50%
- Target industries: Knowledge-based service industries, including professional, scientific and technical services; music, film and performing arts; and specialty hospitals.
21st Century Quality Jobs Program Wage Recommendation
The current average wage requirement in statutes requires qualifying wages to be lower of:
- 300% of the average county wage, or
- 300% of the average of county wages in Oklahoma (currently $102,300)
Oklahoma communities may offer special financing programs, including sales tax financing, tax-increment financing and build-to-suit programs. Communities are also empowered to abate local taxes under certain conditions.
Customized industrial training:
The Oklahoma Department of Career and Technology Education (aka CareerTech) administers the Training for Industry Program (TIP) to provide training to meet the needs of new firms locating in the state or existing Oklahoma firms expanding their operations. The program reimburses for many and, in some cases, all of the costs associated with employee start up training.
Pre-employment training is available as well as safety and on-going employee training. Instruction can occur at the company’s site or at the local technology training facility within the CareerTech system.
The Technology Extension Program is a creation of the Oklahoma Alliance for Manufacturing Excellence, a private nonprofit organization to coordinate the development of a statewide "industrial extension" system to deliver modernization services to small and medium-sized manufacturing firms.
The Oklahoma Center for Science and Technology is authorized to provide grants, loans and investments in technology-related businesses. A statewide Bid Assistance Network helps companies compete for federal government contracts.
The Oklahoma Technology Commercialization Center (OTCC) is operated under the auspices of a state agency, the Oklahoma Center for the Advancement of Science and Technology (OCAST). The OTCC is a not-for-profit corporation that contracts with OCAST to assist Oklahoma companies or individuals that are in the process of commercializing new technology. Besides the Oklahoma City location, the OTCC also has offices in Norman, Stillwater, Tulsa and Lawton.
Federal Tax Incentives on Former Indian Reservation Lands:
Federal legislation clarifies the location of special American Indian lands in Oklahoma that qualify for related tax credits benefiting new and established businesses in Oklahoma. The tax incentive for businesses locating on former Indian lands has been extended through December 31, 2013. More than two-thirds of the lands in Oklahoma meet the Internal Revenue Service-qualifying definition of former Indian lands and qualify for accelerated depreciation. Qualifying lands may include previous tribal land which may have been transferred to new ownership.
The depreciation incentive of the investment is for a shorter recovery period of approximately 40% for nonresidential property. Use of the accelerated depreciation schedule also requires that the depreciable property be placed in service during years 1994 through 2012.
The employment tax credit is 20% of increased wages over those paid to qualified individuals in 1993, including health insurance premiums paid by the employer. Wages of individuals eligible for the employment tax credit may not exceed $30,000 indexed after 1993, and the credit is applicable to new wages of up to $20,000 for years 1994 through 2012. The indexed wage level for 2012 is $45,000.
These federal tax incentives have been extended through December 31, 2013. For more information, contact the Oklahoma Department of Commerce at (800) 588-5959.
A Tax Incentive Area Map of Former Indian Lands can be found at:
Other financing programs:
The Oklahoma Capital Investment Board is empowered to commit or guarantee up to $100 million in privately managed venture capital. The board may fund up to 50 percent of qualified investment portfolios.
Oklahoma State Contact:
Oklahoma Department of Commerce
900 N. Stiles
Oklahoma City, OK 73126-0980
(405) 815-5148 or (800) 588-5959
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.