Taxes and Incentives
The Investment/New Jobs Income Tax Credit
(68 O.S. § 2357.4)*
Investment/New Jobs Tax Credits provide growing manufacturers a significant tax credit based on either an investment in depreciable property OR on the addition of full-time-equivalent employees engaged in manufacturing, processing, or aircraft maintenance. Participation in this benefit prohibits a manufacturer from participating in the Quality Jobs Program unless the manufacturer makes a qualifying capital investment in excess of $40 million.
Manufacturers that invest in qualified new depreciable property and also hire new employees may compute the five-year tax credit either:
- By calculating 1% of the qualifying investment; or
- By multiplying $500 per new employee, and then choosing whichever credit is larger.
Investment in depreciable property must equal at least $50,000, and the number of employees must not decrease as a result of the investment. Qualified property includes all machinery, fixtures and buildings, including warehousing or substantial improvements to buildings used in a manufacturing operation on a manufacturing site. Eligibility is initially determined each year by the taxpayer on its income tax return.
The credit is computed on a year-by-year basis. Therefore, a company that had qualified in one year for the credit based on new employees hired, but experiences a reduction in employment the next year, would still qualify for a partial credit, unless employment fell below the employment level for the year prior to the first year the credit was allowable. If, in later years, additional qualifying employees were added, a new base employment level would be calculated, and the new series of credits could be taken for the number of employees above that base level of employment.
The number of jobs may fluctuate if the credit is based on investment. However, a loss in number of jobs must not be attributable to the new investment.