Incentives Watch: Monetizing State Tax Credits? There’s an Exchange for That

State tax credits can be of no value to a company without income tax liability. As a result, many states are making “transferrable tax credits” available, which allow qualified companies that owe no tax to monetize their credits by selling them on the open market. For states, the advantage “transferrable credits” has over “refundable credits” is that the cash paid to qualifying companies does not come from state coffers.

But, without a central marketplace, finding buyers or sellers of state tax credits can be difficult.

Seeking to meet this need is the Online Incentives Exchange, or The OIX. This online exchange for state tax credits has started in Louisiana and plans to expand to California and Georgia in December, notes the company’s news release. In 2013, The OIX will also offer future transferable credits, as well as refundable credits, to be sold and bought on the exchange, according to the company’s website.

Each credit sold on the exchange is thoroughly vetted with the state agency that issued the credit. In the first few weeks of the exchange’s opening, more than 50 companies have become members, notes the news release.

In addition, a $1 million film tax credit has already been traded on the exchange, according to an article from The Advocate.

In addition to The OIX, there are other places, such as The State Tax Credit Exchange and the South Carolina Conservation Credit Exchange, where taxpayers can go to trade their credits.

Bloomberg BNA’s Green Incentives Navigator allows users to quickly identify transferrable green energy credits. For more information about the various transferable tax credits and incentives available in each state, check out Bloomberg BNA’s State Tax Portfolios.

In other developments . . .

The Promoting Employment Across Pennsylvania (PEP) Act was recently enacted, which allows certain businesses that agree to create at least 250 new jobs in Pennsylvania within five years to keep 95 percent of the state personal income taxes they withhold from the newly-hired workers, according to a Bloomberg BNA Weekly State Tax Reportarticle.

By: Kathleen Caggiano

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