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Economic Development Incentive Program Credit (EDIPC)

The EDIPC is a tax incentive credit to create and stimulate business in Massachusetts.

Overview

The EDIPC is a key component of the Economic Development Incentive Program (EDIP). The Massachusetts Office of Business Development manages the EDIPC.

The EDIPC was designed to:

  • Stimulate job creation in distressed areas
  • Attract new businesses
  • Encourage business expansion
  • Increase overall economic development in Massachusetts

The EDIPC is for certified projects on or after January 1, 2010. For information on projects certified before January 1, 2010, please see the EOAC.

Taxpayers who have their businesses designated as certified projects between January 1, 2010, and December 31, 2016, may receive the credit.

The credit counts against taxpayers’ income tax or corporate excise liabilities. The credit amount is up to 10% of the cost of qualifying property purchased for business use. In some cases, the amount can go up to 40%.

For projects certified on or after January 1, 2017, the amount of the credit allowed in each case is determined by the Economic Assistance Coordinating Council (EACC) based on numerous factors set forth in G.L. c. 23 § 3D.

Moreover, taxpayers who have their businesses designated as certified job creation projects may receive a credit of up to $5,000 per job created.

"Certified projects" and "economic opportunity areas" are designated by the EACC. The EACC may award the credit as a refundable credit.

For certified projects on or after January 1, 2017, a controlling business or its affiliates may receive the credit against their income tax or corporate excise liabilities. The EACC determines the credit amount on a case-by-case basis.

Eligibility

To be eligible to claim the EDIPC, individual taxpayers, partnerships, and corporations must:

  • Apply to the EACC and
  • Have a business designated as a certified project or a certified job creation project

As part of its approval process, the EACC determines:

  • What percentage of the cost of its qualifying property the taxpayer may claim each year
  • The dollar amount awarded for each job created and
  • Whether the credit is refundable

Such businesses may earn a credit for “qualifying tangible properties,” which include:

  • Tangible personal property
  • Other tangible property, including
    • Buildings
    • Structural components of buildings acquired by purchase

During the tax year, the “qualifying tangible properties” must have been:

  • Acquired
  • Constructed
  • Reconstructed
  • Erected

Moreover, qualifying property is subject to the following requirements: 

  • Cannot be a motor vehicle
  • Must either be depreciable property with a useful life of 4 years or recovery property and
  • Real estate cannot be purchased from closely‑related parties.

A business may not take the EDIPC for the property already claimed for the investment tax credit or the low income housing credit.

The EDIPC is available to lessees for lease payments for real estate and tangible personal property.

The credit is not available to lessors.

Minimum Excise, Maximum Amount, and Carryover

The EDIPC may not reduce the excise to less than $456. The maximum amount of credit allowed in a tax year can’t exceed 50% of the personal income tax or corporate excise liability.

If the credit isn’t used because of the 50% limitation, it can be carried over indefinitely. If the credit isn’t used because of the minimum excise limitation or it exceeds the excise for the tax year, it may be carried over for 10 years.

The credit cannot be carried over for more than 5 years after a project’s certification ends.

The EACC may designate the EDIPC as refundable for any certified project, subject to a limitation that the EACC may not award more than $5 million in refundable credits per year. In addition, the EACC is now authorized to specify the timing of the refund. Under the previous EDIPC, the EACC could award a refundable credit only to a manufacturing retention project or a certified job creation project.

 

Recapture

For certified projects between January 1, 2010, and December 31, 2016, the credit may be subject to recapture if:

  • A taxpayer’s business is decertified by the EACC, or
  • A taxpayer stops using the qualifying property in a certified project before the end of the property’s useful life

Recapture is based on the number of years the taxpayer used the property in the certified project.

Recapture is unnecessary if the property was used more than 12 years.

For certified projects on or after January 1, 2017, recapture is required only if the EACC revokes the certification of a project. During the revocation process, the EACC will:

  • Determine the amount of credit subject to recapture
  • Inform the taxpayer and the Department of Revenue at the time of revocation

Additional information

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