Minnesota expands economic development incentives
New opportunities and increased funding for existing programs
TAX ALERT |
Minnesota is striving to become more competitive with its neighboring states regarding economic development and its overall business climate. During the 2013 legislative session, the $24 million Minnesota Job Creation Fund was created, which provides grants of up to $2 million per project to Minnesota businesses investing in and creating jobs in the state. The fund became effective on Jan. 1, 2014.
The new year also brings increased funding for several existing incentive programs. All told, more than $100 million is available to help businesses expand in the state. Some highlights include the $30 million Minnesota Investment Fund, which provides financing to add new workers and retain high-quality jobs, primarily in industrial, manufacturing and technology-related industries, and the Minnesota Job Skills Partnership program, which has $8.3 million available for training grants aimed at businesses and educational institutions.
Most of these programs have capped funding for 2014, which means that timing is important for companies hoping to take advantage of these financial incentives. In many cases, credits and incentives require pre-approval before the qualifying action commences. Therefore, it is important that companies with the potential to invest in Minnesota consider how their plans may be aligned with this new incentive package before beginning any growth or expansion projects.
In addition to these incentive programs, Minnesota implemented tax changes designed to be advantageous to businesses. For example, the state changed its sales tax exemption for capital equipment from a rebate to an upfront exemption. Additionally, an all-encompassing sales tax exemption was created for qualified businesses expanding in greater Minnesota. Finally, the state lowered the threshold for qualifying data centers to receive sales tax benefits over 20 years. The new threshold is $30 million invested over a four-year period. Taxpayers should explore how these tax changes affect their overall tax liabilities and the potential impact to financial planning.
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