States Offer New and Expanded Jobs Tax Credits

Many states enacted new jobs and hiring tax credits or expanded existing credits in 2021. Some of these legislative changes are highlighted below.

New Credits

California

California allows a new hiring credit known as the Main Street Small Business Tax Credit. The credit provides some financial relief to small businesses from the economic disruptions resulting from COVID-19. The credit is equal to $1,000 for each net increase in qualified employees, up to a maximum of $150,000 per employer.

California also offers a homeless hiring credit beginning in 2022. The credit is based on the number of hours worked and varies between $2,500 and $10,000 per eligible employee. Employers may claim up to $30,000 of the credit per year.

Florida

Florida provides a credit for corporate taxpayers that hire student interns beginning in 2022. The credit equals $2,000 for each student intern, up to $10,000 in any tax year.

Illinois

Illinois created new job creation, retention, training, and construction jobs credits for electric vehicle, parts, and battery manufacturing in the state. Taxpayers can earn the credits beginning in 2022. They can begin to apply the credits in 2025. A taxpayer’s credit agreement with the state will establish the amount of credits allowed. The amount of credits allowed will be higher if the manufacturing facility is in an underserved area.

Louisiana

Louisiana has a new credit for businesses that hire one or more eligible youth. The credit is:

• $1,250 per hire in a full-time position; and
• $750 per hire in a part-time position.

Louisiana also allows a new credit for businesses that hire participants in work-release programs for eligible jobs. The credit is equal to 5% of the total wages for 12 consecutive months following the participant’s release from imprisonment.

Beginning in 2022, a Louisiana credit is available for businesses that employ apprentices. The credit is equal to $1.25 per hour of employment per apprentice, up to $1,250 per year.

Montana

Beginning in 2022, Montana provides a credit for employers with qualifying net employee growth in the following sectors:

• construction;
• ·natural resources;
• mining;
• agriculture;
• forestry;
• manufacturing;
• transportation;
• utilities; and
• ·outdoor recreation.

The credit is equal to 50% of the employer’s Federal Insurance Contributions Act liability under IRC Sec. 3111(a) and (b) for Montana source wages paid to the qualifying new employees.

Expanded Credits

Other credits expanded or extended during the 2021 legislative session include:

• Alabama Jobs Act, port, and Growing Alabama credits;
• Georgia jobs tax credit;
• Iowa high quality jobs and targeted jobs withholding credits;
• Illinois credit for high impact business investment that creates jobs;
• Maryland job creation credit;
• Missouri Works program credit;
• Mississippi cut and sew jobs credit;
• New Mexico rural jobs credit;
• Rhode Island qualified jobs credit; and
• West Virginia economic opportunity credit for investment and creating jobs.