Qualified Manufacturing Innovation & Reinvestment Deduction

Overview

The Qualified Manufacturing Innovation and Reinvestment Deduction was established to encourage increased investment and job creation through manufacturing in Pennsylvania.

Uses

Qualified businesses are eligible to deduct five percent of their private capital investment from their corporate net income tax liability if they invest more than $50 million in the creation of new or refurbished manufacturing capacity.

Eligibility

Eligible applicants for the program must be:
(1) An entity engaged in manufacturing;
(2) Registered to do business in Pennsylvania and subject to Corporate Net Income Tax
(3) An Employer directly responsible for the collection, withholding, and remittance of Individual Taxes to the Department of Revenue on behalf of the workforce;
(4) Able to obtain and maintain state tax compliance clearance status with the laws and regulations of the Commonwealth of Pennsylvania, to the satisfaction of the Department of Revenue;
(5) Demonstrate a new capital investment in excess of $50 million for the creation of new or refurbished manufacturing capacity associated with a new location or expansion project at a commonwealth site (the “project site”) and;
(6) Able to provide current and projected employment figures in Pennsylvania and at the project site.

Eligible projects will include the creation of new manufacturing capacity or improvements to existing manufacturing capacity at an identified project site. Limited to the mechanical, physical, biological, or chemical transformation of materials, substances, or components into new products that are the creations of new items of tangible personal property for sale.

Funding

The deduction will be equal to five percent of the private capital investment utilized in the creation of new or refurbished manufacturing capacity per tax year for a period of five (5) years.

Terms

A business may utilize the amount of the deduction in up to five (5) of the succeeding twenty (20) tax years immediately following the issuance of the Department’s award letter. A business cannot use the deduction to reduce its tax liability by more than fifty percent of their Corporate Net Income Tax liability. The deduction is non-transferrable. Any unused portion in a tax year shall expire at the end of the corresponding tax year. The approved deduction is applicable against taxable income. To claim the deduction, a taxpayer must use the other deduction line on the RCT-101.

To claim a tax deduction, a taxpayer must complete the REV-860A QMIRD Worksheet contained in the PA Corporate Net Income Tax REV-1200 CT-1 Instructions.

How to Apply

An application must be submitted online using the Enterprise eGrants System. For assistance in completing the program application, call 1.800.379.7448.

FAQs

For specific questions on this program, contact DCED’s Tax Credit Office, Nick Odato, at: nodato@pa.gov.

Additional Information

Program Timeline:

  • Step 1: Submit online Enterprise eGrants System.
  • Step 2: Receive project commencement letter from the Department to begin qualified project.
  • Step 3: Complete qualified project within the timeframe stated from a designated start date.
  • Step 4: Submit Project Completion Report and Examination Report to the Department within the timeframe designated in the Commencement Letter.
  • Step 5: Receive award notification from the Department if all eligibility criteria have been satisfied.
  • Step 6: Claim tax deduction.

Qualified Manufacturing Innovation & Reinvestment Deduction Guidelines

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