State looks to lure early-stage firms with tax credit reform
Photo | Courtesy of Commonwealth of Massachusetts
Massachusetts State House
With an eye towards luring and retaining early-stage companies to create jobs in Massachusetts, officials announced a series of changes Tuesday to one of the main corporate tax credit programs in the state.
The Economic Development Incentive Program (EDIP) tax credit will no longer have a $5 million annual cap on refundable credits by virtue of the economic development law Gov. Maura Healey signed last year. Her office announced other changes to "Massachusetts' flagship business development tool" Tuesday.
The EDIP program makes available tax credits based on job creation and investment levels. Awards generally range from $10,000 to $15,000 per job created or retained, the state said, and award decisions factor in project location, industry sector, job quality, and the strategic value of the investment.
Eliminating the $5 million annual cap on refundable credits will help more "early-stage, high-growth companies" participate in the incentive program, the administration said, even if they are not yet profitable. The state has also consolidated the two-step application into one application with 60% fewer questions and introduced a new request for proposals to better outline program eligibility, evaluation criteria and award processes.
"This is about making it easier and faster for businesses to invest in Massachusetts," Healey said in a statement. "We're proud to launch a modernized EDIP that removes unnecessary barriers and empowers businesses, especially innovative and early-stage companies, to grow and create jobs in every region of the state."
Businesses that get EDIP awards receive non-refundable tax credits first to reduce up to 100% of their anticipated tax liability. A business can receive refundable tax credits if an award exceeds its anticipated tax liability or if it has no tax liability, the state said. The EDIP program is overseen by the Economic Assistance Coordinating Council, which includes public officials and gubernatorial appointees.
In fiscal year 2024, the EACC certified 14 projects to receive EDIPC tax credits and approved another 16 projects to receive a local-only tax incentive, EDIP Director Geoff Kravitz wrote in the program's most recent annual report. Those projects are expected to result in private capital investment of more than $1.69 billion and create 1,165 jobs, he said.
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