When working with Pennsylvania companies, it may be worthwhile to determine if they’re eligible for the KIZ credit. After all, who doesn’t love tax credits? While the eligibility requirements for the KIZ credit are very specific, the benefits of the potential credit are worth the hassle.
Background
The KIZ tax credit program was designed to encourage entrepreneurial activity and economic growth in PA. In order to meet this goal, the tax credit program is available only to companies participating in innovative activities, such as research and development. With 29 different KIZ regions in PA, each region focuses on their region’s target industries and partners with local universities and colleges, economic development providers, local governments, financial institutions, and venture capitalists.
Eligibility Criteria:
- Must be a for-profit business entity.
- Must be in operation less than 8 years.
- Must be located within one of the 29 KIZ regions.
- Must be within a KIZ target industry.
- Must show an increase in gross revenue from the previous taxable year.
- Must meet any other requirements as specified by DCED.
How is the amount determined?
The maximum credit that can be applied is 50% of the increase in gross revenue from the first year to the second year. For example: ABC Company reports $100,000 in revenue for year 1 and $150,000 for year 2. Their revenue growth from year 1 to year 2 was $50,000. If the company meets the eligibility requirements for the KIZ credit, then their maximum possible credit would be $25,000, 50% of $50,000.
Applications are due by September 15th each year, and credits will be awarded on December 15th of the application year.
If you want to discuss KIZ credits further, please reach out to Caroline Chrisman at cchrisman@stephanoslack.com or Samantha Musser at smusser@stephanoslack.com.
Caroline Chrisman
610-687-1600
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