Delaware provides powerful tax credit programs to incentivize investment and job creation in the state
Job Creation Tax Credit
The Job Creation Tax Credits allows for eligible businesses engaged in qualified activities to receive tax credits against corporate or personal income taxes, gross receipts tax, and public utility tax.
The business must hire five or more qualified employees, make an investment of at least $200,000 ($40,000 per qualified employee) and operate in a qualified facility.
Research and Development Tax Credit
Qualified businesses with research and development expenses are eligible for Delaware research and development tax credits for the taxable year equal to:
- 10 percent of the excess of the taxpayer’s total Delaware qualified research and development expenses for the taxable year over the taxpayer’s Delaware base amount
- 50 percent of Delaware’s apportioned share of the taxpayer’s federal research and development tax credit using the alternative incremental credit method (under Section 41(c)4 of the Internal Revenue Code).
Credit is limited to 50 percent of the Delaware income tax liability.
In addition, under House Bill 318 , Delaware doubled the research and development tax credit available to smaller businesses, while keeping in place the annual cap of $5 million for the credit as whole.
Under this act, businesses with less than $20 million average annual gross receipts for the most recent four years are entitled to a credit equal to 100 percent of the corresponding federal credit.
Clean Energy Technology Device Manufacturers’ Tax Credit
This tax credit is applicable to clean energy technology device manufacturers of solar power devices, fuel cells, wind power devices and geothermal power devices. Those eligible can qualify for tax credits of $750 for each qualified employee.
To be eligible, manufacturers must 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 of opening.
Industrial Public Utility Tax Rebate
Industrial firms that meet criteria for targeted industry tax credits are eligible for a 50 percent rebate off the Public Utilities Tax on new or increased consumption of gas and electricity for five years.
Veterans Opportunity Credit
The Veterans Opportunity Credit is an incentive to hire veterans who served overseas in conflicts since 2001. It is based W-2 wage and aimed at qualified employers located in Delaware that hire one or more qualified veterans.
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 percent of the gross wages, but shall not exceed $1,500 by a qualified employer to a qualified veteran. This is a refundable credit.
No qualified veteran counted for the Veterans Opportunity Credit can be counted in determining the credit under the following credits: Blue Collar Jobs Credit, New Economy Jobs Credit and Business Finder’s Fee Credit.
Business Finder’s Fee Tax Credit
The Business Finder’s Fee Tax Credit was created to incentivize existing Delaware businesses to leverage relationships with suppliers, customers and other businesses to relocate to Delaware. Both the existing Delaware business and new relocating business are eligible for tax credits.
The credit is 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.
The goal is to get more businesses to relocate to Delaware, leading to job creation, increased tax revenues and stronger supply networks.
Bank Franchise Tax CreditLearn more about the Bank Franchise Tax Credit
The Historic Preservation credit offers up to 100 percent tax credit rebate on qualified expenses made during the rehabilitation of any certified historic property.
Tax credits may be used against personal income or bank franchise tax burdens, with credits ranging from $5,000 to $20,000, not to exceed the state’s yearly fiscal limit of $5,000,000.
Learn more about the program through Delaware’s Division of Historical and Cultural Affairs .