The Keystone Innovation Zone (KIZ) program provides for the awarding of KIZ Tax Credits to companies located within the KIZ, provided that certain conditions are met.
A KIZ Company may claim a tax credit equal to 50% of the increase in that KIZ Company's gross revenues in the immediately preceding taxable year that is attributable to its activities in the KIZ, over the KIZ Company's gross revenues in the second preceding taxable year attributable to its activities in the KIZ.
A tax credit under this program for a KIZ Company shall not exceed $100,000 annually. For the purposes of the KIZ Tax Credit, the term "gross revenues" may include grants received by the KIZ Company from any source whatsoever.
ABC Co. operates in a KIZ within the targeted industry segment for that KIZ. In year 1, ABC Co.'s gross revenue resulting from activities within the KIZ amounts to $40,000. In year 2, ABC Co.'s business grows, and their gross revenues from activities within the KIZ amount to $60,000. In year 3, ABC Co. may apply for a KIZ tax credit of $10,000 (50% of the $20,000 increase in gross revenue from year 1 to year 2).
If in year 3, ABC Co.'s gross revenues grow to $500,000 from activities within the KIZ, the company would be eligible to apply for a maximum KIZ tax credit of $100,000 in year 4. Their increase from year 2 to year 3 is $440,000, but 50% of this increase ($220,000) exceeds the $100,000 maximum allowable tax credit.
A KIZ Company must meet the following conditions. It must:
A KIZ company must file an application with the Department of Community & Economic Development (DCED) by September 15th of each year. The application must be accompanied by a certification from the KIZ coordinator stating the KIZ company meets all of the required conditions. Tax credit certificates will be awarded to qualified KIZ companies by December 15th of each year.
Approved tax credits must first be applied against the KIZ company's own tax liability for the taxable year during which the tax credit is approved.
Tax credits may be used against the following state taxes:
Unused portions of a tax credit may not be carried back or refunded. If the KIZ company's tax liability is less than the amount of the tax credit, the company my carry forward the unused portion, or apply to the DCED for approval for the sale of the unused portion of the tax credit to an identified buyer.