The EOAC is one of the key components of the Economic Development Incentive Program (EDIP). The Massachusetts Office of Business Development manages the EOAC.
The EDIP was designed to:
- Stimulate job creation in distressed areas
- Attract new businesses
- Encourage business expansion
- Increase overall economic development in Massachusetts.
The EOAC is for projects certified before January 1, 2010. For information on projects certified after January 1, 2010, please see the EDIPC.
Taxpayers who had their businesses designated as “certified projects” within an economic opportunity area (EOA) before January 1, 2010, may receive the EOAC.
The EOAC counts against taxpayers’ personal income tax or corporate excise liability. The credit is equal to 5% of the cost of the qualifying property purchased for business use.
"Certified projects" and "economic opportunity areas" are designated by the Economic Assistance Coordinating Council (EACC).
Individuals, partnerships, or corporations may apply to the EACC to have their businesses designated as certified projects in an EOA.
Businesses may earn a credit for “qualifying tangible properties.” Tangible personal property includes:
- Structural components of buildings acquired by purchase.
During the tax year, the “qualifying tangible properties” must have been:
- Reconstructed, or
Moreover, qualifying property is subject to the following requirements:
- Cannot be a motor vehicle
- Must be either depreciable property with a useful life of 4 years or recovery property
- Real estate cannot be purchased from closely‑related parties.
The EOAC doesn’t count for the property already calculated for either the:
- Investment tax credit or
- Low income housing credit.
The EOAC is available to lessees only for the cost of leasing tangible personal property. The credit isn’t available for:
- The cost of leasing real estate or
Minimum Excise, Maximum Amount, Carryover, and Recapture
The EOAC 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 for that year.
If the credit isn’t used because of the 50% limitation, it can be carried over indefinitely. The credit may be carried over for 10 years if the credit:
- Isn’t used because of the minimum excise limitation, or
- Exceeds the excise for the tax year.
No credit may be carried over for more than 5 years after a project’s certification ends.
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 isn’t necessary if the property was used more than 12 years.
For more information on how the amount of credit is calculated and important definitions and limitations, please see:
- Massachusetts General Laws chapter 23A, section 3A
- Massachusetts General Laws chapter 62, section 6(g)
- Massachusetts General Laws chapter 63, section 38N
- Massachusetts Regulation 830 CMR 63.38N.1
- Technical Information Release 16-15
- Technical Information Release 14-13
- Technical Information Release 10-1.