Businesses operating in a state-designated rural Enterprise Zone may be eligible for Utah income or corporate franchise tax incentives.
The Enterprise Zone Credit is for certain businesses that hire new full-time employees, restore buildings or meet certain other requirements in a designated zone. Indian tribes may apply for enterprise zone designation within an Indian reservation.
The program is operated by the Governor's Office of Economic Development. Visit the Governor's Office of Economic Development site for information on the program and to see the enterprise zones.
Note: An individual or business may not claim this credit or carry this credit forward into a year that the non-refundable Recycling Market Development Zones Tax Credit (nonapportionable non-refundable credit, code 10) or the Targeted Business Income Tax Credit (refundable credit, code 40) is claimed.
At least 51 percent of those employed by the enterprise zone business must live in the county of the enterprise zone or in the enterprise zone that is adjacent and contiguous to the county of the enterprise zone for the business to qualify for this credit.
Note: A business entity primarily engaged in retail trade or a public utilities business cannot claim this credit. Construction jobs and business entities with no employees are not eligible for the tax credits in paragraph 1 below.
The following non-refundable Utah tax credits apply to qualifying enterprise zone businesses:
- $750 for each new full-time position filled for at least six months of a tax year.
- An additional $500 if the new position pays at least 125% of the county average monthly non-agricultural payroll wage for the respective industry (determined by the Department of Workforce Services). If this information is not available, the job must pay at least 125% of the total average monthly non-agricultural payroll wage in the respective enterprise zone county.
- An additional $750 if the new position is in a business that adds value to agricultural commodities through manufacturing or processing.
- An additional $200 for two consecutive years for each new employee insured under an employer-sponsored health insurance program (the employer must pay at least 50% of the premium cost for two consecutive years).
- A 50% credit up to $100,000 for cash contributions made to a private non-profit corporation exempt from federal income tax under IRC Section 501(c)(3), whose primary purpose is community and economic development (must be accredited by the Utah Rural Development Council Board of Directors).
- A 25% credit of the first $200,000 spent on rehabilitating an enterprise zone building that has been vacant for two years.
- 10% of the first $250,000 and 5% of the next $1,000,000 of an annual qualifying investment in plant, equipment, or other depreciable property.
A business claiming a credit under paragraph 1 above may claim a credit for up to 30 full-time employee positions per taxable year. A business may claim an additional credit for a full-time employee position under paragraph 1 above if:
- The business creates a new full-time employee position;
- The number of full-time employee positions is more than the number previously claimed under paragraph 1 above; and
- The total number of credits claimed for its current taxable year, including the new full-time employee positions, is 30 or less.
Any tax credit in excess of tax due will not be refunded, but may be carried forward to offset tax for up to three years.
Native American tribes may apply for enterprise zone designation within a reservation. To qualify, the land must be in currently recognized boundaries set by the federal government. This includes land removed from the Uintah and Ouray Reservation under Hagen v. Utah (510 U.S. 399 (1994)).
If you are claiming the enterprise zone tax credit allocated and passed-through from a partnership or S corporation return, your credit must be based on the amount allocated to you from the partnership or S- corporation.
Enter the credit on your Utah TC-40A, Part 4, using code 07.
There is no form for this credit. Keep all related documents with your tax records.
For more information, contact:
Governor's Office of Economic Development
60 E South Temple, 3rd Floor
Salt Lake City, UT 84114-6950