Legislation recently introduced in the state Senate would increase tax credits for jobs created in the state’s Qualified Opportunity Zones (QOZ).
The QOZ program was founded by the federal Tax Cuts and Jobs Act of 2017. It offers taxpayers a federal capital gains tax incentive in exchange for the deferral and investment of capital gains in designated, distressed census tracts. The goal is to stimulate economic development and job creation in low-income communities by offering tax incentives for investment into designated distressed census areas.
Pennsylvania has 300 QOZs. Approved businesses in the zones receive between $1,000 to $2,500 per job created.
Senate Bill 944 would increase this limit to $1,500 per job created in a federally designated opportunity zone, or $3,000 per job created in a federally designated opportunity zone if the newly created job is filled by a veteran or an unemployed individual.
“Many states, in order to encourage development in Opportunity Zones, are providing additional state level tax credits and incentives to encourage real estate development and business investments,” Sen. Dan Laughlin (R-Erie County), who introduced the bill, said.
The state’s QOZs were selected based on their distressed economic status, the likelihood of private-sector investment in those specific census tracts, and recommendations from local partners.