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Wisconsin revisits tax credit programs

Currently, the state of Wisconsin has two significant tax credit programs to help businesses locate and expand in the state, the Enterprise Zone Tax Credit and the Business Development Tax Credit. Through these programs, projects can earn refundable tax credits based on job creation, capital investment and workforce training (and in the case of the Enterprise Zone Tax Credit program, supply chain utilization). These programs have been an important part of bringing key projects to Wisconsin.

As business has changed, the need has arisen to reassess tax credit programs at the state level. As projects move from a job creation focus to a capital expenditure focus, state incentive programs need to adapt to accommodate the change in project scopes and deliverables.

Assembly Bill 627 does just that. It changes the focus of the Business Development Tax Credit program from job creation to capital expenditures. Under the new proposed guidelines, projects can earn refundable tax credits based on capital expenditures alone; there is no longer a job creation requirement. Though the incentives remain at 5% for real property and 3% for personal property, the new bill allows additional claims related to investment in workforce housing and employee child care programs at a level not to exceed 15% of those investments. These changes will not only encourage new and expansion projects in Wisconsin, but also help our communities where housing and child care are in demand.

The bill also requires the Wisconsin Economic Development Corporation to review all applications for certification within 90 days. This new review period will allow project decision makers to make fast, well-informed decisions.

Changes are also coming to Enterprise Zone Tax Credit. One significant change amends the definition of “zone payroll” to mean amounts attributable to full-time employees “based in” an enterprise zone. Previously, the program required services to be “performed in” the zone. This new definition accommodates hybrid and work-from-home employees. The new law also creates a new 12-month period “base year” definition for calculation; current law calculates credits using the prior taxable year.

As of March 1, 2024, this bill has passed the Assembly and is waiting for a vote from the Senate. That vote is to take place March 12, 2024.

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