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Federal Incentives
Tax incentives for businesses that hire individuals facing employment challenges, create jobs in underserved areas, and drive growth through research and innovation.
Get StartedAbout Federal Incentives
There are many incentives that the U.S. Government provides to businesses that participate in capital investment, job creation, or hiring people with certain barriers to employment. Some of these programs include the Work Opportunity Tax Credit (WOTC), Federal Empowerment Zones (Fed EZ), Research and Development Tax Credits, and the Federal Insurance Contributions Act (FICA) Tip Credit.
These programs were established to incentivize businesses to hire people that experience significant employment barriers, create jobs in depressed areas, and create overall growth within business sectors. Knowing how to participate in the many incentive programs available can be confusing but also essential to your company’s growth and financial health.
Synergi can help determine which incentive programs can be most beneficial to your business.
Federal Empowerment Zones (Fed EZ)
The Federal Government has designated certain economically depressed areas as tax advantage areas. If your business is located in one of these areas and you employ individuals living in the same area, you can earn credit against your federal tax liability.
Companies that operate in and employ individuals who reside in an Empowerment Zone may qualify for the Federal Empowerment Zone Credit. Empowerment Zones are federally designated urban and rural communities that have a high poverty and emigration levels. In order to stimulate activity in these areas, the government has authorized a tax credit for providing employment to qualified individuals.
- Up to $3,000 per qualified employee per year
- Credits renew every year
- Look back potential up to 3 years
Federal Insurance Contributions Act (FICA) Tip Credit
Employers are responsible for paying Federal Insurance Contributions Act (FICA) and Medicare taxes on the tips employees receive. The FICA tip tax credit is valuable to eligible employers as it reduces the tax burden on employers for the portion of Social Security and Medicare taxes they are required to pay on employee tips, which are considered wages for tax purposes. The credit is claimed on Form 8846 and can be carried forward for up to 20 years.
Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit Program rewards employers for hiring applicants who fall into various target groups. Depending on the qualifications of the individual, companies may be eligible to receive $1,200 to $9,600 per eligible employee per year upon hiring.
Ready for the good news? It’s likely that you’re already hiring individuals who meet the criteria for your business to earn these type of credits. On average, 1 in 5 new hires qualify your business for WOTC.
The tax credit may be worth up to $9,600 if your company is hiring from any one of the following groups:
- Qualified Veterans
- A member of a family that is a Qualified Supplemental Nutrition Assistance Program (SNAP) Benefits Recipient
- Qualified Ex-Felons, Pardoned, Paroled or Work Release Individuals
- Vocational Rehabilitation Referrals
- Qualified Summer Youths
- Qualified Supplemental Security Income (SSI) Recipients
- Qualified Individuals living within an Empowerment Zone, Enterprise Community, Renewal Community, or Rural Renewal County
- A member of a family that is a Qualified Temporary Assistance for Needy Families (TANF) recipient
- A member of a family that is a Qualified Long Term Temporary Assistance for Needy Families (TANF) recipient
- Qualified Long-Term Unemployment Recipients
The Research and Development Tax Credit
Investing in research and development (R&D) is crucial for businesses to stay competitive, adapt to evolving customer demands, and leverage new technologies. Many businesses are not fully utilizing the Research and Development Tax Credit (R&D Credit), which is designed to reward investments into R&D and can help offset the cost of innovation and development.
The R&D Credit is available to all businesses, large and small, that engage in qualified R&D activities, providing a significant financial incentive. Qualified small businesses may be able to apply a portion of the R&D Credit as a payroll tax credit.
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