Enterprise Zones (code 07)

Businesses operating within state-designated rural Enterprise Zones may be eligible for expanded Utah income or corporate franchise tax incentives.

The program is operated by the Governor's Office of Economic Development. Check the Governor's Office of Economic Development website for detailed information on the program and to find out which municipalities and counties are designated as Enterprise Zones.

Note: An individual or business may not claim this credit or carry forward a credit into a year the individual has claimed the targeted business income tax credit or the recycling market development zone tax credit.

For businesses to qualify for the enterprise zone credit, at least 51 percent of the employees employed by the business located in the enterprise zone must reside in the county in which the enterprise zone is located.

Public utilities and businesses engaged in retail trade are not eligible for this credit.
Construction jobs are not eligible for the tax credits in paragraphs 1- 4 below.

The following nonrefundable Utah tax credits are applicable to qualifying businesses in an enterprise zone:

A credit of $750 for each new full-time position filled for not less than six months during a tax year.
An additional $500 tax credit if the new position pays at least 125 percent of the county average monthly nonagricultural payroll wage for the respective industry as determined by the Department of Workforce Services. If this information is not available, the job must pay at least 125 percent of the total average monthly nonagricultural payroll wage in the respective county where the enterprise is located.
An additional credit of $750 may be claimed if the new position is in a business that adds value to agricultural commodities through manufacturing or processing.
An additional $200 credit may be claimed for two consecutive years for each new employee who is insured under an employer-sponsored health insurance program, if the employer pays at least 50 percent of the premium cost for two consecutive years.
A 50 percent credit, not to exceed $100,000, for cash contributions made to a private nonprofit corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, whose primary purpose is community and economic development, and is accredited by the Utah Rural Development Council Board of Directors.
A 25 percent credit of the first $200,000 spent on rehabilitating a building, vacant for two years, in the enterprise zone.
An annual investment tax credit of 10 percent of the first $250,000 investment and 5 percent of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable property.

A business claiming a credit under paragraphs 1- 4 may claim a credit for 30 full-time employee positions or less in each of its taxable years. A business may claim an additional credit for a full-time employee position under paragraphs 1 - 4 above if:

The business creates a new full-time employee position;
The total number of full-time employee positions is greater than the number of full-time employee positions previously claimed by the business under paragraph 1 - 4; and
The total number of credits claimed for its current taxable year, including the new full-time employee positions being claimed as a credit, is less than or equal to 30.

If the tax credit exceeds the tax owed, the credit amount exceeding the tax owed may be carried forward for a period that does not exceed the next three taxable years.

Native American tribes may apply for enterprise zone designation within a reservation. To qualify as reservation land, the location must be within the currently recognized reservation boundaries as set forth by the federal government. It includes land removed from the Uintah and Ouray Reservation under Hagen v. Utah (510 U.S. 399 (1994)).

If enterprise zone credits are being taken on your ownership in a partnership or S corporation, you must allocate the credits calculated above based on your respective percentage of ownership.

For more information, contact

Governor's Office of Economic Development
324 South State Street, Suite 500
Salt Lake City, UT 84111
(801) 538-8804
goed.utah.gov/incentives/enterprise_zones/