For a list of Oklahoma economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.
FINANCING
21st Century Quality Jobs Program (68 O.S. § 3911): This incentive was created to attract growth industries and sectors to Oklahoma in the 21st Century. It offers incentives to businesses with a highly skilled, knowledge-based workforce. For qualifying companies, this unique incentive would pay businesses cash back, up to 10% of payroll, for up to 10 years for the creation of 10 jobs with a high average wage of $94,000 annually or higher, depending on the county.
Requires at least 10 full-time jobs at an annual average wage of the lesser of $95,243 or 300% of the county’s average wage.
Allows a net benefit rate of up to 10% of payroll for up to 10 years.
Out-of-state sales must be at least 50% for most participants.
Companies may receive reduced benefits for jobs/wages less than the 10 required
while they work towards full qualification, so long as the required average wage is
met.
Target Industries: Knowledge-based service industries, including professional, scientific and technical services; music, film and performing arts; and specialty hospitals.
A state wage of $95,243, which is indexed every year, treats the program similarly as the Quality Jobs Program, which requires the wages to be the lower of the average county wage or the state index wage. For more information, contact the Oklahoma Department of Commerce. Program Guidelines may be found at http://okcommerce.gov/assets/files/incentives/21st_Century_Quality_Jobs_Guidelines.pdf.
Oklahoma Film Act (68 O.S. §§ 3621-3626): This rebate has a sunset date of July 1, 2024. The Oklahoma Film Enhancement Rebate Act allows a rebate of up to 37% of qualified expenditures made in Oklahoma that are directly attributable to film, television production and television commercial. Qualifying Expenditures for productions include the cost of construction and operations, photography, sound synchronization, wages and wardrobe, facilities, and related services. The minimum budget for the project shall be $50,000 with a minimum of $25,000 spent in Oklahoma. In addition to the rebate, the State of Oklahoma offers a Point-of-Purchase sales tax exemption to qualifying productions on sales tax paid for property or services to be used in productions. The POP Sales Tax Exemption cannot be used in conjunction with the rebate, and there is no minimum budget or expenditure requirement. For more information, contact the Oklahoma Film + Music Office.
Oklahoma Local Development & Enterprise Zone Incentive Leverage Act (62 O.S. § 840): Provides funding for local units of government to match local tax revenue dedicated to support a project located in an enterprise zone, in support of a major tourism destination or in support of a military growth impact. At a minimum, all projects must meet the following requirements:
Project must be located entirely within an enterprise zone, in support of a major tourism destination which the local governmental entity determines is likely to significantly benefit contiguous or nearby enterprise census tracts, or in support of a military growth impact;
No more than 10% of the net leasable space may be used for retail purposes, and no state local government matching payment shall be made for project costs in support of any gambling establishment;
State local government payments cannot be used to supplant local revenue currently being expended within the increment district boundaries;
Certification that all projects described within the related project plan will generate, in the aggregate, a minimum of either $1,000,000 in payroll, exclusive of payroll for construction, or 5,000,000 in investment;
The application must include an estimate of incremental revenues likely to be derived from the project;
The project must include the commitment of local governmental entity; and
The project meets the time deadlines set forth in 62 O.S. § 842 (I);
If the project is in support of a major tourism destination, the application must meet
the requirements set forth at 62 O.S. § 842 (B) (3) and (B) (4);
If the project is a military growth impact project the application must meet the
definitions set forth at 62 O.S. § 841(13), (14), and (15).
Project can be as the result of the impact of military growth activities if the project area plans to experience a population growth of at least 1,000 persons and increased payrolls of at least $10,000,000 within 5 years.
Oklahoma Quality Jobs Program (68 O.S. § 3601): This incentive targets manufacturers and certain service industries that have a new payroll investment of $2.5 million or more to receive a quarterly cash payment of up to 5% of new taxable payroll for up to 10 years. A lower payroll threshold is available for certain food processing and research and development projects, or as a result of locating in targeted areas. Qualifying wage requirements would be the lower of the average county wage or the state index wage. Companies that have 10% of their workforce as veterans qualify for a higher 6% net benefit rate. Program requirements:
Company must be in a qualifying industry as noted by NAICS description.
Must pay newly created jobs equal to the average county wage or the state
threshold wage, whichever is lower.
Company must achieve $2.5M new annual taxable payroll within three years.
Must offer basic health insurance to employees within 180 days of employment.
Employee must not pay any more than 50% of the premium.
May be combined with Investment/New Jobs Tax Credit under certain
circumstances ($40 million or more in investment within three years).
Up to 6% rebate if at least 10% of new payroll is comprised of qualified military
veterans.
Oklahoma Quick Action Closing Fund (62 O.S. § 48.2): In the 2013 legislative session the budget agreement included appropriating $3,000,000 to the Oklahoma Quick Action Closing Fund. The fund can be expended by the Governor for economic development and related infrastructure development when expenditure of funds is likely a determining factor in locating or retaining a high-impact business project or facility in Oklahoma. The business making an application must be engaged in a business activity that is eligible for Oklahoma Quality Jobs Program Act incentive payments (68 O.S. § 3603) or in a “basic industry” as set forth in the 21st Century Quality Jobs Incentive Act (68 O.S. § 3913). The Oklahoma Department of Commerce is responsible for the administration of the Oklahoma Quick Action Closing Fund.
Small Business Linked Deposit Program (62 O.S. § 88.1A): This provides low-interest certificates of deposit to financial institutions to provide lending capital to eligible small businesses and certified industrial parks which will directly create new jobs or save existing jobs. Successful applicants for Linked Deposit programs receive private loans through local financial institutions at a reduced interest rate. The certificates of deposit bear interest rates of up to 3% below the standard rate. In effect, these savings are “passed on” to the borrowers participating in the program. Loans to businesses with less than 200 employees and gross annual sales of less than $4 million are eligible for up to $1 million. Industrial parks certified by the Oklahoma Department of Commerce are eligible for up to $6 million. Loans are for a two-year term and may be renewed for three additional terms. The lending institution shall give priority to the economic needs of the area where the business is located especially in Enterprise Zones and Priority Enterprise Zones as designated by the Oklahoma Department of Commerce. For more information, contact the Oklahoma State Treasurer’s office.
Small Business Loan Guarantees (15 U.S.C. § 632): The U.S. Small Business Administration offers loan guarantee programs to assist small businesses. Under the guaranty concept, commercial lenders make and administer the loans. The business applies to a lender for financing. The lender decides if they will make the loan internally or if the application has some weaknesses that, in their opinion, will require an SBA guaranty. The guaranty that SBA provides the lender gives them the assurance the Government will reimburse the loan, up to a percentage, in the event the borrower defaults.
Small Employer Quality Jobs Program (68 O.S. § 3901): The Small Employer Quality Jobs Program Allows qualifying small businesses (90 employees or less) to receive up to a 5% cash-back incentive for up to seven years to locate or expand in Oklahoma. Qualifying payroll must be attributable to annual salaries that are 110% to 125% of the average wage of the county in which the jobs are located. Benefits are not payable until the participant has attained both the minimum number of new jobs and the required average wage.
Key elements of the program include:
Cash payments of up to 5% of new payroll for up to seven years.
Must have 90 employees or less at the time of application.
Must have an average of 90 employees or less over the past four quarters at the
time of application.
Must create as few as five and as many as 15 new jobs minimum, based on the
population of the community where the company is located
Must pay the newly created jobs at 110% of the average county wage.
Must have 75% out-of-state sales within one year of start date.
Must offer basic health insurance within 180 days of employment. Employee must
not pay any more than 50% of the premium.
State Small Business Credit Initiative: The State of Oklahoma was awarded $13,168,350 by the U.S Treasury for the State Small Business Credit Initiative. The award will be used to make capital investment in new and expanding small businesses in Oklahoma. i2E will manage the funds on behalf of the State. For more information please contact i2E at (405) 235-2305 or www.i2e.org.
TAX INCENTIVES
Aerospace Industry Engineer Work Force Tax Credits
(68 O.S. § 2357.301): This tax credit will sunset on December 31, 2016. Aerospace companies hiring engineers in a variety of fields will receive a tax credit equal to 5% of the compensation paid to an engineer until January 1, 2015, or 10% if the engineer graduated from an Oklahoma college or university (up to $12,500 per employee per year), plus another credit of up to 50% of the tuition reimbursed to an employee until January 1, 2015. Additionally, the engineer hired receives a tax credit of $5,000 per year until January 1, 2015.
American Indian Lands Tax Incentive: Federal legislation clarifies the location of special American Indian lands in Oklahoma that qualify for related tax credits benefiting new and established businesses in Oklahoma.
Clean Burning Fuel Vehicle Credit
(68 O.S. § 2357.22):
For tax years beginning before January 1, 2020, a one-time income tax credit is available for 45% of the incremental cost of purchasing a new original equipment manufacturer AFV or converting a vehicle to operate on an alternative fuel. The state also provides a tax credit for 10% of the total vehicle cost, up to $1,500, if the incremental cost of a new AFV cannot be determined or when an AFV is resold, as long as a tax credit has not been previously taken on the vehicle. Equipment used for conversions must be new and must not have been previously used to modify or retrofit any vehicle. The alternative fuels eligible for the credit are compressed natural gas, liquefied natural gas, hydrogen and liquefied petroleum gas (propane). Tax credits may be carried forward for up to five years.
Clean Burning Fuel Vehicle Infrastructure Credit (68 O.S. § 2357.22): A tax credit is available for up to 75% of the cost of alternative fueling infrastructure. Eligible alternative fuels include compressed natural gas (CNG), liquefied natural gas, liquefied petroleum gas (propane), hydrogen, and electricity. The infrastructure must be new and must not have been previously installed or used to fuel alternative fuel vehicles. A tax credit is also available for up to 50% of the cost of installing a residential CNG fueling system, for up to $2,500. The tax credit may be carried forward for up to five years. Legislation enacted in 2013 extends the one-time income tax credit for investments in qualified clean burning motor vehicle property from 2015 to 2020 and is effective November1, 2013.
Historic Rehabilitation Tax Credit (68 O.S. § 2357.41): Allows a credit against tax imposed on qualified rehabilitation expenditures incurred in an incentive district created pursuant to the Local Development Act or for qualified rehabilitation expenditures incurred in connection with any certified historic hotel or historic newspaper plant building located in an increment or incentive district created pursuant to the Local Development Act or for qualified rehabilitation expenditures incurred after January 1, 2006, in connection with any certified historic structure. The amount of the credit shall be 100% of the federal rehabilitation credit provided by Section 47 of Title 26 of the United States Code. The credits may be sold during the first five years after qualifying and may be carried forward a total of 10 years. For more information, contact the Oklahoma Tax Commission or www.preservationok.org.
Incubator Site Tenant Tax Exemption (74 O.S. § 5078): A business incubator site is a facility in which small businesses may rent space, and where management provides business development services such as financial consulting and marketing assistance. Sponsors of an incubator may be exempt from Oklahoma income taxes on income earned from rental fees, other income derived from services provided to the tenants, or for providing funding for an incubator site. This exemption is for 10 years from the date of the tenant’s occupancy within an incubator. A sponsor must be a certified incubator with the Oklahoma Department of Commerce. The tenant of a certified incubator, or its owner, is exempt from state tax liability on income earned as a result of activities conducted as an occupant in an incubator for up to 10 years from the occupancy date in an incubator site in accordance with rules of the Oklahoma Tax Commission. The exemption remains in effect after the date the tenant is no longer an occupant in an incubator, but not to exceed a total of 10 years. In order to qualify for the income tax exemption for the 6th through 10th year, the tenant must make at least 75% of its gross sales to buyers located outside the state or to the federal government. For more information contact the Oklahoma Department of Commerce.
Insurance Premium Tax Credit
(36 O.S. § 625. 1): Insurance companies that locate or expand regional home offices in Oklahoma and maintain an employee level above 200 are eligible for special tax credits against the tax imposed in the Insurance Code. Annual credits range from 15% to 50% based on the numbers of full time and year-round employees. This credit is not available to participants in the Quality Jobs Program. For more information contact the Oklahoma Insurance Department.
Investment/New Jobs Income Tax Credit (68 O.S. § 2357.4): Investment/New Jobs Tax Credits provide growing manufacturers a significant tax credit based on either an investment in depreciable property OR on the addition of full-time-equivalent employees engaged in manufacturing, processing or aircraft maintenance. Participation in this benefit prohibits a manufacturer from participating in the Quality Jobs Program unless the manufacturer makes a qualifying capital investment in excess of $40 million. Manufacturers that invest in qualified new depreciable property and also hire new employees may compute the five-year tax credit either:
By calculating 1% of the qualifying investment; or
By multiplying $500 per new employee, and then choosing whichever credit is
larger.
Investment in depreciable property must equal at least $50,000, and the number of employees must not decrease as a result of the investment. Qualified property includes all machinery, fixtures and buildings, including warehousing or substantial improvements to buildings used in a manufacturing operation on a manufacturing site. Eligibility is initially determined each year by the taxpayer on its income tax return. The credit is computed on a year-by-year basis. The number of jobs may fluctuate if the credit is based on investment. However, a loss in number of jobs must not be attributable to the new investment.
For more information contact the Oklahoma Tax Commission at (405) 521-3133 or helpmaster@tax.ok.gov. For forms, visit www.tax.ok.gov
New Products Development Income Tax Exemption (74 O.S. § 5064.7): Royalty earned by an inventor from a product developed and manufactured in Oklahoma shall be exempt from state income tax for a period of seven years from January 1 of the first year in which such royalty is received as long as the manufacturer remains in the state. An instate manufacturer of a product developed in this state by an inventor shall be eligible for a tax credit, as provided for in Section 2357.4 of Title 68 of the Oklahoma Statutes. In addition, such manufacturer may be excluded from Oklahoma taxable income, or in the case of an individual, the Oklahoma adjusted gross income, 65% of the cost of depreciable property purchased and utilized directly in manufacturing the product. The maximum exclusion shall not exceed $500,000. To qualify for the incentives, the product shall be patented or have patent pending pursuant to federal law and shall be registered with the Oklahoma Center for the Advancement of Science and Technology (OCAST).
Oklahoma Community Economic Development Pooled Finance (62 O.S. § 891.1): This incentive targets business expansion projects, which include job creation and significant investment in facilities, machinery and equipment. With a $200 million capacity, this it is comprised of two funding options:
Company-Purchased Debt Option: A for-profit entity in conjunction with one or more unit of local government may make application to the Oklahoma Department of Commerce. If awarded funds, the for-profit entity works through the approval process of the Oklahoma Development Finance Authority (ODFA) to finalize the incentive agreement. The incentive is in the form of annual cash payments from the State of Oklahoma which are due on a Promissory Note issued by ODFA.
Public Finance Option: A for-profit entity in conjunction with one or more unit of local government may make application to the Oklahoma Dept. of Commerce. Complete financial information for three years prior, detailed business plan, detailed budget for expansion project and other financial information may be required. If awarded funds, the for-profit entity works through the approval process of the ODFA to finalize the private bond issuance. The incentive is in the form of cash proceeds from the sale of the private bonds, less the cost of issuance.
Debt issued from the Economic Development Pool may be paid from withholdings taxes, and other revenue, at the for‐profit entity benefitted by the financing. For debt obligations issued under the Oklahoma Community Economic Development Pooled Finance Act, there is a maximum maturity of 25 years and a maximum coupon rate of 14%. While 65% of the net proceeds from both the Infrastructure Pool and the Economic Development Pool shall be used by ODFA for municipalities that do not exceed 300,000 people, the remaining 35% may be used by the ODFA for any eligible local government.
Oklahoma Quality Events Program (68 O.S. § 4302): The State of Oklahoma has a legitimate interest in economic development related to the occurrence of quality events, and the Legislature finds that the use of state sales tax revenues authorized by this act provides a method by which the state can compete successfully in a national and global economy against other jurisdictions offering similar incentives for such events. The Quality Events Incentive Act was enacted July 1, 2012 and created the Oklahoma Quality Events Program which allows communities to recapture eligible expense for hosting a Quality Event. A “Quality Event” is defined as a new event or a meeting of a nationally recognized organization or its members. For more information or to make an application, contact the Oklahoma Tax Commission at helpmaster@oktax.state.ok.us.
Sales Tax Exemptions for Aircraft Repairs and Modifications (68 O.S. § 1357 [28]): Beginning July 1, 2005, sales of aircraft engine repairs, modification, and replacement parts, sales of aircraft frame repairs and modification, aircraft interior modification, and paint, and sales of services employed in the repair, modification and replacement of parts of aircraft engines, aircraft frame and interior repair and modification, and paint are also exempt from sales tax.
Sales Tax Exemptions for Computer Services & Data Processing (68 O.S. § 1357 [21]): Oklahoma recognizes the importance of companies engaged in computer services or data processing activities by offering exemptions from sales tax on sales of machinery and equipment purchased and used by persons and establishments primarily engaged in computer services and data processing:
As defined under Industrial Group Numbers 7372 and 7373 of the Standard Industrial Classification (SIC) Manual, latest version, which derive at least 50% of their annual gross revenues from the sale of a product or service to an out-of-state buyer or consumer; and
As defined under Industrial Group Number 7374 of the SIC Manual, latest version, which derive at least 80% of their annual gross revenues from the sale of a product or service to an out-of-state buyer or consumer.
Sales Tax Exemptions for Manufacturing (68 O.S. §§ 1359, 1359.2 and 1364): Oklahoma has a comprehensive sales tax exemption for manufacturers who obtain a Manufacturer’s Sales Tax Exemption Permit from the Oklahoma Tax Commission. The permit must be renewed every three years. This permit must be presented to the vendor, and a claim for exemption made at or before the time of purchase, to relieve the vendor of the liability for collecting sales tax. The exemptions cover purchases of machinery and equipment, energy, and tangible personal property used in design, development, and manufacturing. Sales to a manufacturer of exempt property must be used in the manufacturing operation at a manufacturing site. The exemption is not extended to purchases for administration, sales, distribution, transportation, site construction or site maintenance. For more information and certification, contact the Oklahoma Tax Commission at 405-521-3133 or otcmaster@tax.ok.gov.
Sales Tax Refunds: Oklahoma offers sales tax refunds for qualified companies. To qualify, a company must submit an Application/Intent to Qualify to the Oklahoma Tax Commission to establish an interest-bearing account. If qualified, the Oklahoma Tax Commission will immediately set up an account to track sales taxes paid on sales as shown by the invoices submitted. Note: Participation in the Quality Jobs Program or other incentive payment programs precludes participation in these refunds.
Tax Increment Financing (TIF) (62 O.S. § 850): Cities and counties in Oklahoma may create tax increment districts to provide funding for economic development in distressed areas for up to 25 years. The tax increment is determined in accordance with the following: The base assessed value includes all real and personal property on the tax rolls and assessed as of January 1st of the year during which the district is designated. Incremental tax dollars are those assessed in excess of the base on the first January 1st after the district has been declared, and continuously until the increment district ceases, less the amount attributable to change in assessment ratio for real and personal property in the county. Proceeds from tax increment financing may be used in accordance with approved plans for project areas such as facilities, infrastructure, parks, sidewalks and other public projects. For more information contact the Oklahoma Department of Commerce.
Technology Transfer Income Tax Exemption (68 O.S. § 2358 [C]): The taxable income of any corporation is decreased for transfers of technology to qualified small businesses located in Oklahoma. The corporation transferring the technology is allowed an exemption from taxable income in the amount of the royalty payment received as a result of such transfer, provided that the exempted amount shall not exceed 10% of the amount of gross proceeds received by such corporation as a result of the technology transfer. “Gross proceeds” is defined as the total amount of consideration for the transfer, whether it is money or otherwise. This benefit lasts for 10 years from the date of the receipt of the first royalty payment accruing from such transfer. For more information, contact the Oklahoma Tax Commission. For forms, visit www.oktax.state.ok.us.
Work Opportunity Tax Credit Program (WOTC): The WOTC Program is in hiatus waiting to be reauthorized by congress. The WOTC was designed to promote the hiring of target group individuals. The tax credit for WOTC is up to $2,400 for each new hire: 40% of qualified first-year wages for those employed 400 hours or more, 25% for those employed at least 120 hours. Qualified wages are capped at $6,000, Summer Youth wages are capped at $3,000, Long Term Family Assistance Recipients are capped at $10,000, Food Stamp Veteran wages are capped at $6.000, Disable Veteran having aggregate unemployment for 6 months wages are capped at $24,000, Unemployed Veteran having aggregate unemployment for at least 4 weeks wages are capped at $6,000, and Unemployment Veteran having periods of unemployment of 6 months wages are capped $14,000.
The tax credit is as much as $1,200 for each Summer Youth hire, $2,400 for each new adult hire, $2,400 for each new hire Food Stamp Veteran, $4,800 for each new Disabled Veteran hire, $9,600 for each new Disabled Veteran unemployed 6 months, $2,400 for each new Unemployed Veteran unemployed for 4 weeks, and $5,600 for each new Unemployed Veteran for 6 months, and $9,000 for each new long-term family assistance recipient hire. For more information and employee certifications, contact the Oklahoma Employment Security Commission.
For more information on these programs and other incentives visit:
http://okcommerce.gov/wp-content/uploads/2015/06/Oklahoma_Business_Incentives_and_Tax_Guide.pdf
Read Oklahoma Incentives and Workforce Development Guide on Business Facilities - Economic Development, Site Selection & Workforce Solutions.