This month, we decided to put our focus on the Beehive State! Utah leads the way as one of the best states for business and economic development. One reason the state is ideal for business is due to tax incentives for companies that create jobs. In addition, cost of living and doing business are 10% below the national average. The state also has the 10th lowest tax burden in the country; the corporate tax rate has not risen in 15 years!

 

Business Climate                                                                                                       

Utah is very pro-business, and companies benefit from the state having the third lowest energy costs in the nation. Over the last few years, the state has become a technology hub, adding locations for companies such as EBay, Oracle, Microsoft, Twitter, and Adobe.  It has been said that the talent pool in Utah is very good with the availability of software engineers and Mormon missionaries with foreign language skills. Since their expansion into Utah last year, Oracle alone has added more than 300 jobs. Financial services are another targeted area for Utah. Goldman Sachs has 1,700 employees in Salt Lake and expects significant growth in the next two to four years.

Taxes

According to the Tax Foundation’s 2015 State Business Tax Climate Index, Utah ranked favorably at 9th out of 50.  Utah’s corporate income tax system consists of a flat rate of 5%. That rate ranks 12th lowest among states levying a corporate income tax. Utah’s state and local corporate income tax collections per person were $91 in 2012 which ranked 14th lowest nationally.

Utah’s personal income tax is also a flat rate of 5%. That rate ranks 20th lowest among states levying an individual income tax. Utah’s state and local income tax collections per person were $870 in 2012 which ranked 22nd lowest nationally. Utah levies a 5.95% general sales or use tax on consumers, which is the same as the national median of 5.95%.

Tax Credits & Incentives

Corporate tax incentives in Utah include the EDTIF tax credit and, Enterprise Zone tax credit. The EDTIF tax credit is a post-performance, refundable tax credit for up to 30% of new state revenues (sales, corporate and withholding taxes paid to the state) over the life of the project (typically 5-10 years). It is available to companies seeking relocation and expansion of operations to the State of Utah. Requirements for this credit are as follows:

  • Obtain commitment from local government to provide local incentives and establish an Economic Development Zone
  • Enter into an incentive agreement with the Governor’s Office of Economic Development which specifies performance milestones.
  • Create new high-paying jobs in the state
  • At least 50 jobs in urban counties
  • At least 125% of urban county average wage or 100% of rural county wage
  • Generate new tax revenues.
  • Significant capital investment
  • Significant purchases from Utah vendors or suppliers

The Utah Enterprise Zone program was established in 1988. The following credits may be claimed by eligible business locating or expanding in enterprise zones:

Job Creation Tax Credits (maximum 30 full time positions per tax year):

  1. A $750 tax credit for each new full time position filled for at least six months during the tax year.
  2. An additional $500 tax credit if the new position pays at least 125% of the county average monthly wage for the respective industry (determined by the Utah Dept. of Employment Security). In
  3. An additional $750 tax credit if the new position is in a business which adds value to agricultural commodities through manufacturing or processing.
  4. An additional $200 tax credit, for two consecutive years, for each new position insured under an employer sponsored health insurance program if the employer pays at least 50% of the premium.

Other Tax Credits:

  1. A tax credit (not to exceed $100,000) of 50% of the value of a cash contribution to a 501(c)(3) private nonprofit corporation engaged primarily in community and economic development, and is accredited by the Utah Rural Development Council.
  2. A tax credit of 25% of the first $200,000 spent on rehabilitating a building which has been vacant for at least two years, and which is located within an enterprise zone.
  3. An annual investment tax credit of 10% of the first $250,000 in investment, and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable property.

Nonrefundable tax credits are available to eligible businesses in designated enterprise zones from the start of the tax year in which the designation is made.  Unused credits may be carried over for three years. Businesses closing operations in one rural area to locate in another rural area may not claim tax credits under this program. Construction jobs are not eligible for tax credits. Retail businesses and public utilities are not eligible to claim tax credits.

Random Facts

  • Utah has the first and only ski-in / ski-out distillery (High West Distillery & Saloon – Park City) in the world.
  • Cleveland-Lloyd Dinosaur Quarry boasts the densest concentration of Jurassic era dinosaur fossils ever discovered. Located south of Price Utah, more than 12,000 bones from at least 74 dinosaurs have been excavated.
  • Utah has reduced their homeless population by 74% by developing programs to give people homes. They found that investing in this manner is cheaper than paying for emergency room visits and jail stays.
  • State symbol is the beehive which symbolizes thrift and industry.
  • Beaver, Utah is the birthplace of two very famous individuals, Philo T. Farnsworth, the inventor of television and Butch Cassidy, the notorious western outlaw.