The federal government has prescribed certain areas to receive lucrative location-based tax incentives. These zones and their commensurate benefits are available throughout the United States. Please see below for examples of HUD Zones within metropolitan areas.
The Empowerment Zone is a program designed to encourage businesses to locate and hire within geographically targeted areas.
- Each qualified employees hired within an Empowerment Zone is eligible for an employment credit worth up to 3,000 per year.
- Unlike hiring credits, employment credits are not limited to new hires so the entire employee base may be considered for qualification each year.
- Taxpayers pay no federal tax on properly structured capital gain transactions within the Empowerment Zone.
- Empowerment Zone businesses are eligible for an increased Section 179 deduction
The Renewal Community is similar to the Empowerment Zone. It has programs for capital gain exclusions, employment credits and Section 179 adjustments. The major difference is rather than an employment credit ceiling of $3,000 the Renewal Community program has a ceiling of $1,500 per employee per year. Unlike the Empowerment Zone, the Renewal Community was not renewed in 2010.