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Home > Tax Expenditure Budget > Summary > Corporate and Ohter Business Excise > Credits Against Tax

Credits Against Tax

Fiscal Year 2013 Resource Summary (in Millions)
TAX EXPENDITURE	FY2011	FY2012	FY2013
Credits Against Tax	358.4	416.1	416.0

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item	description	amount
Credits Against Tax		416.0
2.602	Investment Tax Credit Manufacturing corporations and corporations engaged primarily in research and development, agriculture or commercial fishing are allowed a credit of 3% of the cost of depreciable real and tangible property. Such property must have a useful life of four years or more. The property must be used and located in Massachusetts on the last day of the taxable year. A corporation cannot take the credit on property which it leases to another. A corporation can take the credit on property which it leases from another (for property leased and placed in service on or after July 1, 1994). Generally, eligible corporate lessees making qualifying leasehold improvements may claim the credit. A corporation may carry over to the next succeeding three years any unused portion of its Investment Tax Credit (ITC) To be consistent with all other estimates in this document, this estimate is based on actual investment tax credit claims of corporations from the most recent Corporate Excise Returns Report, and does not take into account increased tax revenues resulted from greater economic activity induced by the investment tax credit (i.e., the estimate is "static", not "dynamic") Origin: M.G.L. c. 63, S. 31A (i), (j) Estimate: $56.5	56.5
2.603	Vanpool Credit Business corporations are allowed a credit of 30% of the cost incurred during the taxable year for the purchase or lease of company shuttle vans used in the Commonwealth as part of an employer-sponsored ridesharing program. The shuttle vans must be used for transporting employees. Origin: M.G.L. c. 63, S. 31E Estimate: Negligible	Negligible
2.604	Research Credit A credit is allowed for corporations which made basic research payments and/or incurred qualified research expenses conducted in Massachusetts during the taxable year. A corporation taking the research credit is limited in the amount that can be taken against the excise in any year. The credit cannot reduce the tax to less than $456. The amount of credit is equal to: 100% of the first $25,000 of excise; and 75% of any amount of excise remaining after the first $25,000. The deduction allowed to a corporation for any research expenses generating a Massachusetts Research Credit must be reduced by the amount of the credit generated. This amount is added back to income on Schedule E, line 13. Any corporation which is a member of a combined group may share excess research credits with other members of the combined group. Corporations which are members of a controlled group or which are under common control with any trade or business (whether or not incorporated) are treated as a single taxpayer for purposes of determining the allowable Research Credit. The credit may be carried-forward for up to 15 years with certain restrictions. Origin: M.G.L. c. 63, S. 38M Estimate: $110.9	110.9
2.605	EDIP/Economic Development Incentive Program Credit Businesses investing in qualified property in an Economic Opportunity Area are entitled to a credit against tax of 5% of the cost of the property. To qualify for the 5% credit, the property must be used exclusively in a certified project in an Economic Opportunity Area. To be certified, the Economic Assistance Coordinating Council must approve a project. Sections 21 to 24 and 47 of chapter 166 of the Acts of 2009 made significant changes to the Economic Development Incentive Program (EDIP) established pursuant to G.L. c. 23A, including the tax credit provided in G.L. c. 62, S. 6(g) and G.L. c. 63, S. 38N which is a key component of the EDIP. Under the provisions of the Economic Development Incentive Program (EDIP) established pursuant to M.G.L. Ch. 23A, the Economic Assistance Coordination Council (EACC) may authorize taxpayers participating in certified projects to claim tax credits. Certified housing credit has been recently created and managed under this incentive. The credit may be carried-forward for up to 10 years with certain restrictions. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 38N Estimate: $21.7	21.7
2.606	Credit for Employing Former Full-Employment Program Participants Employers who continue to employ former participants of the S.110(1) full employment program in non-subsidized positions are eligible to receive a tax credit equal to $100 per month for each month of non-subsidized employment, up to a maximum of $1,200 per employee, per year. Origin: St. 1995, c. 5, S. 110(m); 830 CMR 118.1 Estimate: Not active	Not active
2.607	Harbor Maintenance Tax Credit Corporations are allowed a credit against the corporate excise for certain harbor maintenance taxes paid to the U.S. Customs Service pursuant to IRC sec. 4461. A corporation is eligible for the credit if the tax paid is attributable to the shipment of break-bulk or containerized cargo by sea and ocean-going vessels through a Massachusetts harbor facility. The credit is not subject to the 50% limitation; however, it may not reduce the tax to less than the minimum excise of $456. A taxpayer may carryover any excess credit to any of the next succeeding five taxable years. Origin: M.G.L. c. 63, S. 38P Estimate: $1.0	1.0
2.608	Brownfields Credit Taxpayers are allowed a credit for amounts expended to rehabilitate contaminated property owned or leased for business purposes and located within an economically distressed area. The eligibility period for the Brownfields Credit has been lengthened. The environmental response action commencement cut-off date has been extended by c. 240 of the Acts of 2010 from August 5, 2005 to August 5, 2013 and the time for incurring eligible costs that qualify for the credit has been extended to January 1, 2014. The Brownfields Credit may be transferred, sold or assigned to another taxpayer with a liability under chapter 62 or chapter 63, or to a nonprofit organization. The Brownfields Credit cannot offset more than 50% of the excise due nor reduce the excise below the minimum tax. The credit may be carried-forward for up to 5 years. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 38Q Estimate: $24.6	24.6
2.609	Low Income Housing Credit This credit is administered through the Massachusetts Department of Housing and Community Development (DHCD). The Low Income Housing Credit is available to taxpayers that claim a U.S. credit for the construction or development of low income housing. The amount of credit a taxpayer may claim for a qualified Massachusetts project is allocated by the DHCD and is based on a total pool of money awarded to the Commonwealth. The LIHC is not subject to the 50% limitation rule for corporate taxpayers. If the taxpayer disposes of the property generating the LIHC, a portion of the credit may be subject to recapture. Under prior law, the Massachusetts low-income housing tax credits were available only to taxpayers who had been allocated federal low-income housing tax credits. Effective August 1, 2010, the Act allows the Department of Housing and Community Development to grant state low-income housing credits (within the existing $10 million annual cap) to otherwise eligible projects that do not receive a federal low-income housing credit. The credit may be carried-forward for up to 5 years and may be transferred or sold to another taxpayer. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 31H Estimate: $38.6	38.6
2.610	Historic Buildings Rehabilitation Credit Effective for years beginning on or after January 1, 2005 and ending on or before December 31, 2017, taxpayers may be eligible for the Historic Rehabilitation Credit (HRC). To claim this credit, a historic rehabilitation project must be complete and have been certified by the Massachusetts Historical Commission. Unused portions of the credit may be carried-forward for up to 5 years and transferred or sold to another taxpayer. The HRC is not subject to the 50% limitation rule for corporate taxpayers. If the taxpayer disposes of the property generating the HRC, a portion of the credit may be subject to recapture. The expenditure for this item (combined with the Historic Rehabilitation Credit for individual filers, item 1.610) was originally capped at $15 million per year, with a start date for the credit of January 1, 2005 and an end date of December 31, 2009. Chapter 123 of the Acts of 2006 extended the availability of the credit for an additional two years, to December 31, 2011, and increased the annual $15 million cap amount to $50 million. Again, the credit has been extended for an additional six years, to December 31, 2017. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 38R; TIR 10-11 Estimate: $47.5	47.5
2.614	Film (or Motion Picture) Credit For taxable years beginning on or after January 1, 2006 and before January 1, 2023, Massachusetts allows two credits for motion picture production companies who meet certain qualification requirements. Production companies who incur at least $50,000 of production costs in Massachusetts are eligible for income and corporate excise tax credits equal to 20% of the total Massachusetts payroll for the production, excluding salaries of $1 million and higher. In addition, production companies whose Massachusetts production expenses exceed 50% of the total production cost receive an income and corporate excise tax credit of 25% of the total Massachusetts production expense. Supporting documentation is available to the Department of Revenue upon request. This tax credit is refundable at 90% of the approved credit amounts. Also the credit may be carried-forward for up to 5 years. In addition, all or any portion of tax credits issued may be transferred, sold or assigned to other taxpayers with tax liabilities under chapter 62 (the individual income tax) or chapter 63 (the corporate or other business excise taxes). For applications submitted prior to January 1, 2007, film tax credits were capped at $7,000,000 for any one motion picture production has; for applications submitted on or after January 1, 2007, there is no cap. Also, the sunset date for the film incentives statute has been extended from January 1, 2013 to January 1, 2023. See TIR 07-15 for more information (See also item 1.611.) The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 38X Estimate: $82.6	82.6
2.615	Medical Device User Fee Credit The Medical Device Credit is equal to 100% of the user fees actually paid to the United States Food and Drug Administration (USFDA) by a medical device company during the taxable year for which the tax is due for pre-market submissions (e.g., applications, supplements, or 510(k) submissions) to market new technologies or upgrades, changes, or enhancements to existing technologies, developed or manufactured in Massachusetts. The credit may be carried-forward for up to 5 years. Also the credit may be transferred or sold to another taxpayer. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 31L Estimate: $3.6	3.6
2.616	Devens Refundable Tax Credit Effective July 21, 2006, the Economic Opportunity Area credit is made refundable for certain projects. Notwithstanding subsections (b) to (d), inclusive, of section 38N of chapter 63 of the General Laws, in the event that a credit allowed under said section 38N of said chapter 63 exceeds the tax otherwise due under said chapter 63, the balance of that credit shall be refundable to the taxpayer in the taxable year in which qualified property giving rise to that credit is placed in service. This applies to credits for projects in the biotechnology industry, certified on or after June 1, 2006 and before June 1, 2008 by taxpayers who commit to investment of not less than $650 Million over a period of 8 years and the creation of not fewer than 550 new jobs at the project site. "Project" means the design, planning, permitting, site preparation, construction, development, and operation of infrastructure and other improvements, including demolition of existing structures and design and construction of necessary replacement structures on adjacent or proximate land, and upgrades to the existing electric and gas utility systems serving the Devens Regional Enterprise Zone, as established by chapter 498 of the acts of 1993, to support the operation of a large scale biologics pharmaceutical manufacturing facility, or reasonably required to facilitate complete development, construction, and operation of such a facility. (See item 2.605) Origin: M.G.L. c. 63, S. 38N, St. 2006, c. 173, S. 3 Estimate: $0.0	$0.0
2.617	Life Sciences Tax Incentive Program On June 16, 2008, "An Act Providing for the Investment in and Expansion of the Life Sciences Industry in the Commonwealth" was passed. The Act establishes the Life Sciences Investment Program as well as the Life Sciences Tax Incentive Program. It provides for a $1B dollar investment in the life sciences sector, including $25 million each year for 10 years for the Massachusetts Life Sciences Investment Fund (subject to required authorizations by the Massachusetts Life Sciences Center and to approval by the Secretary of Administration and Finance). These incentives are effective from January 1, 2009 through December 31, 2018. Since the tax expenditures in this item will be subject to approval and their composition will differ from year-to-year, it is not known what proportion will be in the form of corporate tax credits as opposed to other tax expenditures. However, the Department of Revenue believes that the largest portion of the tax expenditure will be in the form of corporate tax credits, and therefore has placed it in this section of the tax expenditure budget. Since July 1, 2010, the Life Sciences Refundable Jobs Credit has been added to this program. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 31M; 38CC; 38W; 38U Estimate: $25.0	25.0
2.618	Dairy Farmers Credit The Massachusetts dairy farmer tax credit was established to offset the cyclical downturns in milk prices paid to dairy farmers and is based on the U.S. Federal Milk Marketing Order for the applicable market, such that when the U.S. Federal Milk Marketing Order price drops below a trigger price anytime during the taxable year the taxpayer will be entitled to the tax credit. The total amount of credits granted cannot exceed $4 million in any year. A taxpayer who holds a certificate of registration as a dairy farmer pursuant to M.G.L. Ch. 94, sec. 16A is allowed a refundable tax credit based on the amount of milk produced and sold. The dairy farmer tax credit as originally enacted was 90% refundable. Under the recent legislation, the dairy farmer tax credit is now 100% refundable. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 38Z Estimate: $3.6	3.6
2.619	Conservation Land Credit(NEW) Tax credit is allowed for qualified donations of certified land to a public or private conservation agency. The credit is equal to 50% of the fair market value of the qualified donation. The amount of the credit that may be claimed by a taxpayer for each qualified donation cannot exceed $50,000. The credit is refundable but not transferable. The credit is available to both chapter 62 and chapter 63 taxpayers. The credit is applicable to insurance companies as well. Origin: M.G.L. c. 63, S. 38AA Estimate: $0.5	0.5

Key:

ORIGIN
IRC	Federal Internal Revenue Code (26 U.S.C.)
M.G.L.	Massachusetts General Laws
U.S.C	United States Code
ESTIMATES	All estimates are in $ millions.

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