- Capital: Dover
- Population (2012 Est.): 917,092
- Largest Cities (2012): Wilmington, 71,292; Dover, 37,089; Newark, 32,367; Middletown, 19,483; Smyrna, 10,708
- Targeted Industries: Aerospace & Aviation, Green & Material Sciences, Insurance & Financial Services, Healthcare & Life Sciences, Tourism
- GDP (All Industry 2012): $65.9 billion*
*Bureau of Economic Analysis, U.S. Department of Commerce
The Delaware Strategic Fund (DSF): Represents the primary funding source used by DEDO to provide customized financial assistance to businesses—for businesses considering locating or expanding in the State of Delaware, financial assistance may be provided in the form of low interest loans, grants or other creative instruments to support the attraction of businesses that pay sustainable wages, with assistance terms that are negotiated specific to each firm’s individual needs and situation. Additionally, the DSF supports the following programs:
- Brownfield Assistance Program: Encourages the redevelopment of environmentally distressed sites within the state by helping to reduce related capital expenditures. DEDO administers the program in collaboration with the Department of Natural Resources and Environmental Control (DNREC). The program offers the lesser of up to $100,000 or 50% of the costs associated with the investigation and remediation of a Brownfield site. Phase I costs are excluded from the Program and each project must have an employment impact of a minimum of five permanent full-time jobs.
- Delaware Capital Access Program (DCAP): Provides portfolio insurance to participating financial institutions enabling the financial institution to expand its small business lending. The DCAP is a private-public match program. The Delaware Access Program is designed to give banks a flexible and non-bureaucratic tool to make business loans that are somewhat riskier than a conventional bank loan, in a manner consistent with safety and soundness. It is designed to use a small amount of public resources to generate a large amount of private bank financing, thus providing access to bank financing for many Delaware businesses that might otherwise not be able to obtain such access. Based on a risk-pooling concept, the approach is fundamentally different from the traditional type of insurance or guarantee program, such as the Federal Small Business Administration 7(a) Program, which guarantees a percentage of a loan on a loan-by-loan basis. When a bank makes a loan under the Program, the borrower pays a one-time premium charge, which is matched by a bank premium payment. DEDA then matches the combined total of the borrower’s payment and the bank’s payment. The borrower’s premium is one of the terms of the loan to be worked out privately between the bank and the borrower.
- Delaware Rural Irrigation Program (DRIP): Increases the quality and yield of Delaware’s crops by increasing acres of irrigated cropland in Delaware. Administered collaboratively through the Delaware Department of Agriculture and the Delaware Economic Development Office (DEDO), it is a revolving no-interest loan fund available to qualified Delaware farmers to add new irrigation systems including center pivot, linear move, towable systems, span angle systems, corner arm systems, single phase systems or wells and filters associated with drip irrigation systems.
- Small Business Innovation Research (SBIR): The DSF supports business research that will bring innovative new products, jobs and revenue to Delaware. The fund represents the primary funding source used by for SBIR Bridge Grants. The SBIR Matching Grant program provides grants funds to businesses located in the State that have obtained a federal SBIR Grant.
Renewable Energy Facilities Revolving Fund: Created by a $500,000 grant from the U.S. Department of Commerce and matched with funds from the Delaware Strategic Fund, this fund provides loans at market or below-market interest rates to businesses that will create or retain jobs in industries that promote energy efficiency or recycling.
Delaware Technical Innovation Program (DTIP): Supports businesses that have received a Phase I (SBIR/STTR) federal award and have submitted a Phase II (SBIR/STTR) application through funding transition grants which lead to innovative new products, jobs and revenue to Delaware.
State Small Business Credit Initiative (SSBCI): This program enhances small businesses access to capital and lower interest rates. SSBCI dedicates $12.1 million to the creation of a participation program between DEDO, lending institutions and their small business clients and dedicates $1 million to the Delaware Capital Access Program.
Capital Investment: Projects that require major capital investments representing targeted industries and creating new jobs with sustainable wages and benefits may qualify for cash incentives to offset major capital investments that are necessary for the new business expansion. The terms are negotiated specific to each firm’s individual needs and situation with a maximum limit of 3% of Capital Expenditures.
National Emergency Grants: The Delaware Economic Development Office (DEDO) and the Delaware Department of Labor, Division of Employment and Training (DOL/DET) are working collaboratively to assist Delaware companies with funds made available through the National Emergency Grant (NEG). These funds are granted by the US Department of Labor in order to temporarily expand the services that the State is able to provide in times of emergency. They can be granted to the State to help provide services to affected workers from large layoffs, plant/business closures, or natural disasters and provides funding to train workers who have been unemployed for greater than 23 weeks.
The State of Delaware has adopted a clear, bipartisan policy to attract new business and encourage the expansion of existing operations. Key tax features include:
- No State or local general sales tax.
- No personal property or inventory taxes.
- Real property taxes are among the lowest in the country.
- Property tax relief for new construction and improvements of existing property.
- The exemption of certain investment and holding companies from corporate income tax.
- The adherence of the State tax structure to the federal definition of corporate net income so that companies may take full advantage of any federal tax law change, such as more rapid depreciation of newly purchased assets.
- Port of Wilmington foreign trade zone allows the deferment of import taxes.
- Public Utility Tax rebates of 50% on increased consumption for qualifying industries, and reduced rate for manufacturers and agricultural processors.
Tax Credits/Rebates for Qualifying New Business Entities: Eligibility and Administration managed by Delaware Division of Revenue
New Business Facility Corporate Income Tax Credit: Corporate Income Tax: Any eligible corporate taxpayer that makes a qualified investment ($200,000 or more) and that hires five or more qualified employees ($40,000 per employee) is entitled to receive a tax credit. Eligible corporations receive credits of $500 for each qualified employee and $500 for each $100,000 invested, not to exceed 50% of their tax liability in a given year. Unused credits may be carried forward. The credits can be taken each year over a 10 year span but may not exceed 50% of the company’s pre-credit tax liability. This tax credit program was previously referred to as the Blue Collar Tax Credit. For a $20,000,000, the 10 year credit could be $150,000 (100 x 500 + 20,000,000/100,000 x 500). If the investment is in a targeted area, you substitute $750 for the $500, so the credits would be 50%higher in each scenario noted above. The $150,000 would increase to $225,000.
Alternative Investment Credit Required for Telecommunications Services  & Banking : Instead of five employees and $40,000 of investment per employee (as mentioned in the New Business Facility Corporate Income Tax Credit), telecommunication service businesses are required to hire at least 50 qualified employees and make a minimum investment of $15,000 per qualified employee. Telecommunication service businesses meeting these criteria are entitled to a $500 tax credit for each qualified employee hired and a $500 credit for each $100,000 in qualified investment made. Tax credits earned by banks are used to reduce their liability under the bank franchise tax. Like telecommunication services, banks must also increase employment by a minimum of 50 employees and make a minimum investment of $15,000 per qualified employee. Unlike telecommunications services, however, there is no tax credit for each $100,000 of investment. Furthermore, only full-time employees receiving health insurance benefits are counted when calculating the $500 credit (per qualified employee).
Gross Receipts Tax Credit: The Gross Receipts tax break is offered over a 10-year horizon. In this case, it’s not a credit based on jobs and/or investment; it’s just a straight reduction.
Public Utility Tax Credit: Any firm that is eligible for tax credits under the Blue Collar Jobs Act (as defined under Title 30, Section 2011(a)) is also entitled to receive for five years a rebate of 50% of the public utility tax that it owes on the operation of new or expanded enterprise. Another alternative refundable tax credit that is available through Delaware Division of Revenue is the New Economy Jobs Credit. However, it is important to note that each business entity will have to choose which tax credit will be most beneficial for their business as they must select either the New Business Facility Tax Credit or the New Economy Jobs Tax Credit.
New Economy Jobs Refundable Tax Credit: The New Economy Jobs program allows employers to obtain up to a 65% rebate on the withholding taxes for their new Delaware taxpayers. Delaware firms may apply to Delaware Division of Revenue for potential eligibility of the New Economy Jobs Refundable Tax Credit. This program requires a company to create a minimum of 50 jobs with each qualifying position paying a salary equal to or greater than $108,487 in 2012. In addition to the salary requirement, the eligible employee must be a new tax payer to the State of Delaware. New Economy Jobs Tax Credits are not transferable. Tax credits must be applied for annually, after initial certification, and will be adjusted to reflect the actual of number of employees that qualify each year. On August 13, 2012, Governor Markell signed into law an Act to expand the New Economy Jobs Program by creating another means by which employers relocating jobs to Delaware may qualify for the tax credit. Under this Act, employers that relocate at least 200 jobs to Delaware will be entitled to a tax credit equal to 25% of the withholding paid by the employer on behalf of the relocated employees. If employers relocate more than 200 jobs, the size of the tax credit increases and can reach 40% if the employer relocates 500 or more employees. The Act also maintains incentives for relocating jobs into municipalities, targeted growth areas and counties, and on to redeveloped brownfields. Altogether, the maximum tax credit can reach 65% of the withholding paid on behalf of the relocated employees.
Business Finder’s Fee (BFF) Tax Credit: Designed to incentivize existing Delaware businesses to leverage their relationships with suppliers, customers and other businesses to relocate to Delaware, resulting in job creation, increased revenues and stronger supply networks. Both the existing Delaware company (Sponsor Firm) and the new relocating business (New Business Firm) shall be eligible for a tax credit equal to $500 multiplied by the number of full-time Delaware employees of the New Business firm each tax year for three years following the date in which the New Business Firm is certified in Delaware.
Work Opportunity Tax Credit (WOTC) Federal Program: The WOTC is an employer credit designed to help move people from welfare into gainful employment and obtain on-the-job experience. The credit for the employer can be as much as: $2,400 for each new adult hire; $1,200 for each new summer youth hire; $4,800 for a veteran entitled to compensation for a service-connected disability; $9,000 for each new long-term family assistance recipient hired over a two-year period.
Research & Development (R&D) Tax Credits: Delaware R&D credits provide for up to $5 million in tax credits to all Delaware taxpayers for qualified R&D expenses in a taxable year. Qualified businesses that incur R&D expenses (as defined in Section 41(c) of the Internal Revenue Code) may elect Delaware R&D credits for the taxable year equal to: (1) 10% of the excess of the taxpayer’s total Delaware qualified R&D expenses for the taxable year over the taxpayer’s Delaware base amount, or (2) 50% of Delaware’s apportioned share of the taxpayer’s federal R&D tax credit using the alternative incremental credit method (under Section 41(c)4 of the Internal Revenue Code). In no year may the Delaware R&D tax credits exceed 50% of the taxpayer’s qualified tax liability. Any unused credit may be carried forward and applied to no more than 15 succeeding taxable years following the first taxable year for which the taxpayer was entitled to claim the credit.
Tax-Exempt Bond Financing: The Delaware Economic Development Authority (DEDA) provides statewide financial assistance to new or expanding businesses, governmental units and certain organizations that are exempt from federal income taxation (collectively, assisted persons”) by issuing tax-exempt bonds and lending the proceeds of such bonds to these assisted persons. Tax-exempt bonds bear lower interest rates than comparable taxable bonds, because the interest paid to bond holders is exempt from federal and Delaware income taxes. DEDA is able to pass on this lower interest rate to the assisted persons. DEDA does not guarantee the payment of principal or interest on the bonds, and the bonds are not backed by the full faith and credit of the State. Tax exempt financing may be cost effective for projects involving the issuance of more than $1,250,000.
Job Creation Tax Credit: Eligible businesses that (1) are engaged in a qualified activity (listed below); (2) hire five or more qualified employees; (3) make an investment of at least $200,000 ($40,000 per qualified employee) in a qualified facility; and (4) apply within three years after a qualified facility is placed in service, receive tax credits against corporate or personal income taxes, gross receipts tax, and public utility tax.
- Manufacturing, including clean technology device manufacturing;
- Scientific, agricultural or industrial research, development or testing;
- Computer processing or data preparation or processing services;
- Engineering services;
- Consumer credit reporting services, including adjustment and collection services and credit reporting services;
- Aviation services;
- Non-custom computer software;
- Telecommunications services;
- Any combination of the activities described above; or,
- The administration, management or support operations (including marketing) of any activity described above
Eligible businesses receive credits of $500 for each qualified employee and $500 for each $100,000 invested. These credits may be taken during the tax year in which the qualified facility is placed in service and for any of the nine following years. The aggregate amount of credits claimed in any given year may not exceed 50% of the firm’s tax liability. Credits may be carried forward. Businesses that are not subject to the corporation income tax (e.g., pass through entities such as S-Corporations) are entitled to use the credits against the personal income tax. For businesses with a minimum of $1 million investment or 15% of the unadjusted basis, the credit will be reduced to 75% of the maximum tax credit, and they are not required to hire five or more employees.
Clean Energy Technology Device Manufacturers’ Tax Credit: Clean energy technology device manufacturing that hire five or more qualified employees or make an investment of at least $200,000 ($40,000 per qualified employee), and apply within three years after a facility is placed in service are eligible for tax credits of $750 for each qualified employee. For manufacturing with a minimum of $1 million investment or 15% of the unadjusted basis, the credit will be reduced to 75% of the maximum tax credit, and they are not required to hire five or more employees. Clean energy technology device manufacturing is activity of manufacturing for solar power devices, fuel cells, wind power devices or geothermal power devices.
Veterans Opportunity Credit: The credit is an incentive to hire veterans who served in overseas conflicts since 2001. This is based W-2 wage and for qualified employer located in Delaware which hires one or more qualified veterans. Qualified veteran means either a Delaware resident engaged in qualified military service, or non-resident, who as a member of the DE National Guard, engaged in qualified military service, was honorably discharged, or is a current member of a National Guard or Reserve unit and is employed on or after January 1, 2001, and prior to January 1, 2016. The credit can be taken against the following taxes: Bank Franchise Tax, Corporate Income Tax, Personal Income Tax and Insurance General Premium Tax. The Credit shall be 10% of the gross wages, but shall not exceed $1,500 by a qualified employer to a qualified veteran. This is a refundable credit.
Sussex County Business Incentive Program: Sussex County offers new and expanding businesses a local incentive package that reduces property taxes and assorted fees in exchange for a long-term commitment to measurable new job creation. The goal is to encourage investment and job creation in Sussex County by providing local, supplemental economic incentives to new and expanding companies based on the new employment opportunities they offer to the county. The maximum incentive is $800 for each newly created full-time job with benefits. There is a minimum requirement that 10 full-time positions, with benefits, be created. The applicant must be a for-profit entity. Sussex County fee reductions may include graduated property tax abatement over a 10-year period, as well as reductions in building permit, building code, planning and zoning, sewer review and sewer inspection fees.
Workforce Training Grants: We realize that companies often have a need for specialized training. The Delaware Economic Development Office can offer matching training grants for customized training for up to $100,000 per qualified project. The matching portion of the grant can be an in-kind contribution while training is customized to the company’s specific needs. The workforce training grant can be used for various training initiatives through-out the year ranging from entry level to front-line supervisory training.
Workforce Recruitment: With Delaware’s skilled workforce, your company will staff its new facility with a team eager to support your success. To assist in the hiring process, the Delaware
Economic Development Office will coordinate recruitment efforts with the Department of Labor to ensure your employment needs are met or exceeded.
Blue Collar Training Grant: Available to help Delaware businesses provide customized training programs to upgrade and/or retrain their employees and provide financial assistance to full time employees.