Incentives Watch: Regulatory Round-Up: States Provide (Some) Guidance on State Tax Credit Programs

With the legislative season mostly over, states have turned to developing regulations to provide clarity and guide practical application for new changes to their tax codes. This annual trend is readily apparent in the number of state tax credit regulations released just this month. State agencies in New Jersey, Georgia, New York, Delaware, and Mississippi have addressed issues ranging from general credit application to tweaking the kinds of expenses that may qualify. The regulations are essential for taxpayers to ensure the credits are qualified and claimed accurately. This blog contains a brief overview of recent state tax credit regulations. 

New Jersey

Approved on May 23, 2018, New Jersey A.B. 3723 revived the off-shore wind tax credit in New Jersey. Following up on the reactivation of the credit, the New Jersey Development Authority released regulations §§ 19:31-20.1 through -20.16 for the renewed credit. The regulations add several definitions, lists the information required for the application and project description, and further clarifies project qualifications for the credit. Considering the size of the potential benefit, the regulations also require the recipient to submit an annual report detailing the progress of the taxpayer toward compliance with employment and investment obligations. 


A credit offered for 10 years, the Qualified Education Expense Credit, received small regulatory revisions this year. Regulations 560-7-8-.47 add new information, including the annual aggregate credit cap for each year until 2028, the mandatory electronic pre-approval application process, and the process for claiming the credit. The Department of Revenue also provides updated examples, necessary for an accurate understanding of the credit’s application. 

New York

New York has once again adopted emergency regulations concerning its Empire Zone program, effective Oct. 12 and expiring Jan. 10, 2019. NYCRR Title 5, Parts 10 through 16 describe eligibility standards, the certification and decertification process, and certain rules concerning the size and location of development and investment zones. That New York has issued emergency regulations for the 3rd time in the last year, suggesting an inability to propose and adopt permanent guidance. This practice furthers uncertainty for taxpayers wishing to participate and may lead to underutilization of the credit program. 

Delaware and Mississippi

Other states made smaller changes to existing credit programs in Delaware and Mississippi. Delaware took the opportunity to amend regulations surrounding its historic rehabilitation credit. 1 D.E. Administrative Code 901-1.0 through -12.0 increases the window in which rehabilitation activities can take place and also increases the application fee. The Mississippi Department of Revenue also adopted amendments to regulation § 35.X.09, amending their motion picture production tax incentive. The rule ends the approval of certain nonresident employee expenses. 

While statutory provisions receive much of the fanfare, regulations can provide valuable insight and guidance to ensure the proper functioning of incentives. State agencies that take the time and energy to carefully consider regulatory changes are rewarded with confident taxpayers. That confidence can translate into greater program participation, in most cases a win-win for taxpayers and state governments alike. 

Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Which new state regulations have had the most impact on your business? 

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