The Work Opportunity Tax Credit (“WOTC”) is a federal income tax credit incentive provided to private sector employers who employ certain target groups of job seekers who face employment barriers.
Your business does not need to be located in a Federal Empowerment Zone to qualify for this credit. The WOTC tax credit is based on hiring new hires and there is no limit to the number of new hires who can qualify an employer for a tax credit.
The WOTC can range between $2,400 – $9,600 for each newly hired qualified employee-which can really add up to significant savings!
Research and Development Tax Credit
The Research & Development tax credit is a federal and state income tax credit designed to encourage risk-taking for companies to invest in a new or improved product or process development.
In general, the R&D tax credit allows companies to claim up to 13% (net of tax) of qualified research expenses. The credit is a dollar-for-dollar reduction of federal and state taxes and therefore, improves cash flow.
Domestic Production Activity Deduction (DPAD)
Sec. 199 generally provides for an extra deduction of 9% of the income from certain production activities, in addition to the otherwise allowable deduction for production costs.
The activities that qualify for this deduction are not limited to what might be thought of as traditional manufacturing but include construction, engineering, architectural services, film production, some utility company activities, and producing certain other qualifying production property.