Incentives
In July, 2006, the NC General Assembly passed legislation that created a new tax credit program, Article 3J Credits. Article 3J provides three types of tax credits to eligible taxpayers that undertake qualifying activities in North Carolina. Additionally both Buncombe County and Asheville City have local incentive programs.Below is a summary of state and local incentive programs. For further information, please contact Ray Denny, vice president of economic development Asheville Area Chamber of Commerce, at (828) 258-6128 or rdenny@ashevillechamber.org
State Incentives (as applicable in Buncombe County, which is a Tier 3 County)
Investment in Business Property Tax Credit
The investment tax credit equals 3.5% of the excess value above $2 million of machinery and equipment placed in service in Buncombe County by eligible new or expanding firms. The credit is taken in equal installments over four years after the machinery and equipment is first placed in service (generally when it is capitalized on the books).
Job Creation Tax Credit
Firms with at least fifteen full-time employees working 40 or more weeks during the taxable year can take a NC tax credit for each new job created. The credit is $750 per job created and is taken in equal installments over four years.
Urban Progress Zone-City of Asheville
Special areas within city limits have been designated as urban progress zones which provide for higher tax credit incentives than non-designated areas. In these zones the job creation tax credit new job minimum is 5 with a 1,000 per job tax credit; if the job is filled by a resident of the zone or a long-term unemployed worker, the credit is an additional $2,000. Investment in Business Property Tax Credit’s investment threshold becomes $0 with a 7% tax credit.
Research & Development Tax Credit
A taxpayer that has qualified North Carolina research expenses for the taxable year is allowed a credit equal to a percentage of the expenses. The tax credit applies to all industries that do R&D; rewarding a taxpayer only for R&D done inside North Carolina. It provides a special 3% rate for small businesses that do R&D, a special 3% rate for R&D done in Tier 1, and a graduated rate (1% to 3%) for other R&D to provide an incentive for increasing R&D done in North Carolina.
| Expenses | Over Up | To Rate |
| -0- | $50 million | 1% |
| $50 million | $200 million | 2% |
| $200 million | – | 3% |
This summary is not meant to be exhaustive. Taxpayers should review the Article 3J statutes prior to claiming credits. Taxpayers that are uncertain about their eligibility or ineligibility to claim credits after reviewing the Article 3J statutes should consult with the Department of Revenue (919-733-5297).
OTHER STATE INCENTIVES PROGRAMS
State-Funded Customized Labor Training (provided through Asheville-Buncombe Technical Community College)
One North Carolina Fund (subject to availability of funds)
Job Development Investment Grant Program (JDIG) (sustained annual grants to new and expanding businesses measured against a percentage of withholding taxes paid by new employees, currently set to sunset in January 2008)
Local Incentives
Both local governmental units have adopted incentive policies which provide for grants to be paid back to projects based primarily on their capital investment. Other criteria such as number of new jobs created, wages, etc. may also be considered in determining the grant amount.
Buncombe County and Asheville City Incentive Policies
Typically, New and Expanding Companies that invest a minimum of $1.5 million dollars in new construction, machinery and equipment in Buncombe County and/or the City of Asheville, may be eligible for an Economic Development Incentive Grant from Buncombe County and/ or the City of Asheville. Please contact the Vice President of Economic Development at the Asheville Area Chamber of Commerce for more detailed information about these programs. (828) 258-6128.
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