Washington Incentives and Workforce Development Guide
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The Collateral Support Program (CSP): The Collateral Support Program (CSP) can help small businesses secure SBA 504 financing with their lenders when collateral support is a concern. CSP will place cash deposits with the lending institution as additional collateral support to help lenders approve the necessary bridge loan required to achieve SBA 504 approval. Participating lenders can be contacted for program details and qualifications. SBA 504 loans can provide financing for real estate as well as heavy equipment.
Craft3 Fund: A non-profit Community Development Financial Institution (CDFI) that lends to small businesses in underserved communities across the state, including by partnering with other small business lenders. Through its SBCI partnership, Craft3 will generally make loans from $250,000 to $5 million (smaller loans are also available directly from Craft3).
W Fund: A $18.5 million dollar venture fund, will invest in early-stage life science, biotech, medical device, alternative energy, and information technology companies emerging from universities and research centers across Washington. The objective is to spur company formation and job creation from Washington’s significant research and development base. Fund recipients will be located in the state, providing vital capital and creating economic opportunity in key growth sectors.
General Manufacturing Industry
Sales and Use Tax Exemption for Manufacturing Machinery & Equipment (M&E): Available to manufacturers and processors for hire performing manufacturing and R&D. Testing operation for a manufacturer and processor for hire. To qualify, the manufacturer must purchase qualifying machinery and equipment used directly in a manufacturing operation or research and development performed by a manufacturer, or testing operations performed for a manufacturer.
Rural County/Community Empowerment Zone (CEZ) Incentives
Purchases of Server Equipment and Power Infrastructure for use in Eligible Data Centers – Sales/Use Tax Exemption: Available to the owner of an eligible data center with a combined square footage of at least 100,000 square feet and tenants of the owner of an eligible data center located in a rural county.
B&O Credit for New Employees in Manufacturing and Research & Development in Rural Counties: Available to manufacturers, R&D laboratories, and commercial testing facilities located in rural counties or within a CEZ. To qualify, the company must create new employment positions/increase in state employment by 15%. In turn, this incentive gives a $2,000 credit/position with annual wages/benefits of $40,000 or less; or a $4,000 credit/position with wages/benefits of more than $40,000 annually.
Sales & Use Tax Deferral/Waiver for Corporate Headquarters Locating in Community Empowerment Zone: Available to business with corporate headquarters locating in a CEZ. Business must invest at least $30 million in qualified buildings, tangible personal property, fixtures, etc, including labor and planning, and must employ at least 300 employees, each who must earn at least the annual average wage for the state for that year.
High Unemployment County/ Community Empowerment Zone (CEZ)
High Unemployment County Sales/Use Tax Deferral/Waiver for Manufacturing Facilities: Available to manufacturers, persons conditioning vegetable seeds, research and development and commercial testing for manufacturers in a qualifying county or in a Community Empowerment Zone (CEZ). Qualifying counties are those counties with an unemployment rate at least 20% higher than the statewide rate based on a three year average published by the Employment Security Department. Qualifying activity: certain construction and equipment purchases for new and expanding businesses. The application must be filed before building permit is issued or business takes possession of machinery and equipment and qualified activity must be maintained at the site for eight years after certified operationally complete.
High Technology Industry
Biotechnology & Medical Device Manufacturing Sales & Use Tax Deferral/Waiver: A sales and use tax deferral/waiver program is available for investments in construction or renovation of structures, or machinery and equipment used for biotechnology product or medical device manufacturing.
Reduced B&O Tax Rate for Aerospace Businesses: This incentive is available to manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers.
B&O Credit for Preproduction Development Expenditures: Available to manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers. Qualifying activity: expenditures for aerospace preproduction development. B&O tax credit is equal to 1.5% of qualified preproduction development.
B&O Credit for Property/Leasehold Taxes Paid: Available to manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales and aerospace tooling manufacturers. Qualifying activity for manufacturers: Payment of property/leasehold taxes on new buildings, land, the increased value of renovated buildings, and equipment eligible for the machinery and equipment (M&E) exemption that is used exclusively in manufacturing commercial airplanes or components of such airplanes; or in manufacturing tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes. Qualifying activity for Certificated FAR Part 145 Repair Stations and Aerospace Non-manufacturers: Payment of property/leasehold taxes on new buildings, land, the increased value of renovated buildings, and qualifying computer equipment and peripherals used exclusively in aerospace product development or in providing aerospace services.
Sales & Use Tax Exemption for Aerospace Businesses for Computer Hardware/Software/Peripherals: Available to manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes, non-manufacturers engaged in the business of aerospace product development, certificated FAR repair stations making retail sales, and aerospace tooling manufacturers. Qualifying activity: purchases of computer hardware, software, and computer peripherals, and charges for labor and services related to the installation of such equipment.
Retail Sales and Use Tax Exemption for the Construction of New Facilities Used to Manufacture Commercial Airplanes, Fuselages or Wings of Commercial Airplanes: Available to manufacturers who construct new buildings and/or new parts of buildings that will be used primarily to manufacture commercial airplanes, commercial airplane fuselages, and commercial airplane wings. Also available to port districts, political subdivisions, or municipal corporations when they construct new facilities to lease to these manufacturers.
Extracting & Timber Manufacturing
Reduced B&O Tax Rate for Timber Extracting and Manufacturing: Available to timber extractors and extractors for hire, timber manufacturers and processors for hire, sales of standing timber.
Food Manufacturing Industry
B&O Tax Exemption for Manufacturing Fresh Fruit & Vegetables, Dairy & Seafood Products: Available to manufacturers of fresh fruit and vegetables, dairy and seafood products. Qualifying Activity: manufacturing fruit or vegetable products by canning, preserving, freezing, processing or dehydrating fresh fruits or vegetables or wholesale sells by the manufacturer when the goods are transported out-of-state by customer in normal course of business. Manufacturing dairy products and selling at retail or wholesale dairy products manufactured by the seller to purchasers who transport the good out of the state. Also sales of dairy products sold by the manufacturer to a customer who uses such dairy products as an ingredient or component in manufacturing another dairy product in Washington. Manufacturing seafood products or selling at retail or wholesale manufactured seafood products to a customer who transports the goods out of state in normal course of business. Annual Survey filed by April 30.
Reduced B&O Tax Rate for Manufacturing Wood Biomass Fuel: Available to manufacturers of wood biomass fuel.
Property/Leasehold Tax Exemption for Manufacturers of Biodiesel/Alcohol Fuel, etc.: Available to manufacturers of alcohol fuel, biodiesel fuel, biodiesel feedstock, or wood biomass fuel.
B&O Tax Deduction for Sales of Biofuels: Available to retail sellers and distributors of biodiesel fuel and E85 motor fuel. Qualifying Activity: when calculating the B&O tax, a deduction may be claimed for amounts received from the retail sale or distribution of biodiesel fuel or E85 motor fuel.
Sales/Use Tax Exemption for Machinery/Equipment, Delivery Vehicles & Construction of Facilities for Retail Sales of Biofuels: Available to retail sellers of biodiesel fuel and E85 motor fuel. Qualifying Activity: purchases of machinery and equipment or services to construct structures, including charges for installing, constructing, repairing, cleaning, decorating, altering, or improving the structures or machinery and equipment, used directly for the retail sale of a biodiesel blend or E85 motor fuel. Purchases of fuel delivery vehicles or charges for installing, repairing, cleaning, altering, or improving the vehicles including repair parts and replacement parts if at least seventy-five percent of the fuel distributed by the vehicles is a biodiesel blend or E85 motor fuel.
Reduced B&O Tax Rate for Manufacturers of Semiconductor Materials: Available to manufacturers or processors for hire of semiconductor materials. Qualifying Activity: manufacturing or processing for hire semiconductor materials. “Semiconductor materials” means silicon crystals, silicon ingots, raw polished semiconductor wafers, and compound semiconductor wafers.
Sales/Use Tax Exemption for Purchases of Semiconductor Gases & Chemicals: Available to manufacturing or processors for hire of semiconductor materials. Qualifying Activity: Sales of gases and chemicals used by manufacturer or processor for hire in the production of semiconductor materials. “Semiconductor materials” means silicon crystals, silicon ingots, raw polished semiconductor wafers, compound semiconductor wafers, silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers.
Aluminum Smelting Industry
Reduced B&O Tax Rate for Aluminum Smelting: Available to aluminum smelters and processors for hire who manufacture aluminum in Washington state. Qualifying Activity: manufacturing aluminum and selling the same at wholesale by aluminum smelters and processors for hire.
B&O Tax Credit For State Portion of Sales Tax on Materials Used in Aluminum Smelter: Available to aluminum smelters and processors for hire who manufacture aluminum in this state. Qualifying Activity: B&O tax credit for state portion of sales tax paid on materials, equipment, labor and services used in aluminum smelter.
B&O Tax Credit for Property Tax on Aluminum Smelter: Available to aluminum smelter who manufacture aluminum in this state. Qualifying Activity: B&O tax credit for property tax paid by aluminum smelter.
Brokered Natural Gas Use Tax Exemption: Available to aluminum smelters who manufacture aluminum in this state. Qualifying activity: use tax exemption for the use of natural or manufactured gas by an aluminum smelter.
Renewable Energy/Green Incentives
Solar Energy System and Components of Solar Energy Systems Manufacturers – Reduced B&O Tax Rate: Available to manufacturers, manufacturers that sell their product at wholesale, and processors for hire of solar energy systems and specified components of solar energy systems using photovoltaic modules or stirling converters. Qualifying Activity: Reduced B&O tax rate of 0.275% for manufacturers, manufacturers that sell their product at wholesale, and processors for hire of solar energy systems and specified components of solar energy systems using photovoltaic modules or stirling converters.
Renewable Energy Cost Recovery Incentive Payment Program – Electrical Energy Production Using Power from Solar, Wind & Anaerobic Digester: available to individuals, businesses, local government entities that are not in the light and power business or gas distribution business, and participants in a community solar project. Qualifying Activity: except for a community solar project, participants must generate electricity on their own property with an anaerobic digester, wind generator, or solar energy system and apply to their light and power company for a payment based on kWhs produced and type of equipment used to produce the electricity.
Hog Fuel and Forest-Derived Biomass – B&O Tax Credit and Sales/Use Tax Exemption: B&O credit is available to harvesters of forest-derived biomass. Sales and use tax exemption is available on purchases of hog fuel. “Hog fuel” is defined as wood waste and other wood residuals including forest-derived biomass. Does not include firewood or wood pellets.
Warehouse Incentive Programs
Remittance of State Sales Tax for Warehouses, Distribution Centers, Grain Elevators, Cold Storage: Available to Wholesalers or third-party warehousers who own or operate warehouses, grain elevators, and retailers who own or operate distribution centers. Qualifying Activity: Construction or expansion of warehouse or distribution center by at least 200,000 square feet, or construction or expansion of a grain elevator by at least one million bushel storage capacity.
Job Skills Program (JSP): Training customized to meet employers’ specific needs. Training is delivered to new or current employees at the work site or in a classroom. JSP training is a tool for enhancing the growth of Washington’s economy and increasing employment opportunities. It provides funding for training in regions with high unemployment rates and high levels of poverty. It also supports areas with new and growing industries; locations where the local population does not have the skills needed to stay employed; and those regions impacted by economic changes that cause large-scale job loss. JSP awards grants to licensed educational institutions in Washington. JSP funds half of the training cost; partner employers provide a cash or in-kind match to fund the other half.
Washington Customized Employment Training Program – B&O Tax Credit: The Washington Customized Training Program (CTP) was created by the State Legislature to provide training assistance to businesses that provide employment opportunities in Washington. Training is provided by community, technical or private career colleges and can include formal training in: basic education and skills, English language for non-native speakers, technical skills and job-related instruction, plus skills assessment and evaluation and training equipment, materials, facilities and supplies. Under the Customized Training Program, the State Board for Community and Technical Colleges (SBCTC) pays the costs up front for customized training. After training is completed the business repays the costs to the SBCTC interest free. The first payment will be equal to 25% of the full cost of the training program and is due upon completion of the training. The remaining 75% is spread over the next 18 months. As each payment is made the business may take a state B&O tax credit equal to 50% of the payment. Thus, the total tax credit will be equal to 50% of the full cost of the training program.