Washington Incentives and Workforce Development Guide

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For a list of Washington economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

 

FINANCING

Collateral Support Program (CSP): The CSP can help small businesses secure bridge loans of up to 18 months including SBA 504 bridge financing. CSP will place cash deposits with the lending institution as additional collateral support to help lenders approve the loan. Most small businesses types are allowed to participate in the CSP. 

Craft3 Fund: Craft3 is a non-profit Community Development Financial Institution (CDFI) that has partnered with SBCI to make loans to small businesses with a focus on underserved communities across the state. Generally loans range from $250,000 to $5 million.

Energy Efficiency and Solar Grants: Commerce received a $25,000,000 appropriation in the 2015-2017 state Capital budget to continue the program. Eligible entities include state public higher education institutions, local government facilities, state agencies and K-12 public school districts. The program focuses on funding the best energy efficiency and solar projects possible. See http://www.commerce.wa.gov/Documents/2015-17%20Energy%20Efficiency%20and%20Solar%20Grant%20Guidelines%20final%2011.4.15.pdf for guidelines.

Export Voucher Program: The Washington State Department of Commerce’s Export Voucher program, funded in part by the U.S. Small Business Administration’s (SBA) State Trade and Export Promotion grant, offers qualified companies new to exporting or expanding into new export markets up to $5,000 for export-related expenses (a minimum 25% cash match is required). 

W Fund: The W Fund, an $18.5 million venture fund, invests 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. Investment maximums are $500,000 per investee.

 

TAX INCENTIVES

Aerospace Reduced Business & Occupation (B&O) Tax Rate: 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.

Aerospace 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.

Aerospace 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.

Expenditures for aerospace product preproduction development qualify. The credit is equal to amount of qualified expenditures multiplied by 1.5%.

Aerospace Manufacturers for Computer Hardware/ Software/Peripherals Sales & Use Tax Exemption: 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.

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.

Machinery and Equipment (M&E) Sales & Use Tax Exemption: Available to manufacturers and processors for hire performing manufacturing and research and development (R&D). Testing operation for a manufacturer and processor for hire. 

Motion Picture Competitiveness Program Contributors B&O Credit: Persons who make cash contributions to an approved Motion Picture Competitiveness Program (MPCP) may qualify for a B&O tax credit. MPCP is a nonprofit organization whose sole purpose is to revitalize the state’s economic, cultural and educational standing in the national and international market of motion picture production. The credit has a total statewide annual cap of $3.5 million and is available on a first-come basis.

Purchases of Server Equipment and Power Infrastructure for use in Eligible Data Centers – Sales/Use Tax Exemption: Available to owner of an eligible data center in a rural county with a combined square footage of at least 100,000 square feet and tenants of an eligible data center. Sales/use tax exemption on purchases of eligible server equipment and labor to install in an eligible data center; purchases of eligible power infrastructure, and labor and services to construct, install, repair, alter or improve eligible power infrastructure.

The data center must have a building permit to construct, renovate or expand the data center issued between:

  • April 1, 2010 and June 30, 2011
  • April 1, 2012 and June 30, 2015
  • July 1, 2015 and June 30, 2025

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 cold storage warehouses and retailers who own or operate distribution centers. Qualifying Activity: Construction of a 200,000-square-foot warehouse or distribution center or a grain elevator with a one million bushel capacity. Credit Amount is a refund of all or part of the state’s portion of sales tax paid on qualifying construction and material racking/handling equipment (state’s portion 6.5%)

Renewable Energy/Green Industry Tax Incentives: 

Energy Production Using Solar, Methane, & Wind Power – Renewable Energy System Cost Recovery Program: 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. 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 kilowatt-hours (kWh) produced. No incentive payments will be paid for kWh generated after June 30, 2020

Hog Fuel Sales/Use Tax Exemption: Available to anyone that purchases hog fuel—defined as wood waste and other wood residuals including forest-derived biomass—to produce electricity, steam, heat or biofuel. Does not include firewood or wood pellets.

Machinery & Equipment Used to Generate Electricity Using Renewable Energy – Sales/Use Tax Exemption: Available to anyone that generates electricity using fuel cells, sun, wind, biomass energy, tidal and wave energy, geothermal resources, anaerobic digestion, technology that converts otherwise lost energy from exhaust, or landfill gas. Anyone that generates solar thermal heat using a solar hot water system or solar collector. Qualifying Activity:

    • Solar systems up to 10kW: 100% sales tax exemption taken at the time of purchase on:
      • Machinery and equipment to be used directly in a solar system with a DC Nameplate rating of 10kW or less
      • Labor charges to install such equipment
    • Solar Thermal Heat: 100% sales tax exemption taken at the time of purchase on:
      • Solar thermal heat system capable of producing no more than 3 million British thermal units per day that use a solar collector or a solar hot water system
      • Labor charges to install such equipment
    • Solar systems greater than 10kW and other qualified renewable energy systems 1kW or greater: 75% refund of sales tax paid on machinery and equipment used directly to generate electricity from the following sources and labor charges to install the same:
      • Solar energy systems that produce more than 10kW of electricity
      • Energy systems that produce at least 1kW of electricity from the following sources: fuel cells, wind, sun, biomass energy, tidal or wave energy, geothermal resources, anaerobic digestion, technology that converts otherwise lost energy from exhaust, or landfill gas.

Manufacturers of Solar Energy System and Components of Solar Energy Systems – Reduced B&O Tax Rate: 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 can receive a reduced B&O tax rate of 0.275%

Rural County/CEZ Business and Occupation (B&O) Credit for New Employees: Available to manufacturers, R&D laboratories and commercial testing facilities located in rural counties or within a CEZ that create new employment positions/increase in-state employment by 15%.

Credit Amount:

  • $2,000 credit/position with annual wages/benefits of $40,000 or less
  • $4,000 credit/position with annual wages/benefits of more than $40,000

 

WORKFORCE DEVELOPMENT

Job Skills Program (JSP): JSP is 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. Job Skills Program projects must meet one or more of the following: 

  • Provides short-term training which has been designated for specific industries;
  • Provides training for prospective employees before a new operation opens or when existing industry expands;
  • Includes training or retraining for workers already employed to avoid dislocation, or where upgrading of existing employees would create new vacancies for unemployed persons;
  • Serve an area with high concentrations of economically disadvantaged persons and high unemployment;
  • Promotes the growth of industry clusters;
  • Serves an area where there is a shortage of skilled labor to meet job demands; and
  • Promotes the location of new industry in areas affected by economic dislocation

Washington Customized Employment Training Program – B&O Tax Credit: 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.

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