Delaware’s Division of Revenue administers tax credits against the corporate and personal income taxes, gross receipts tax, public utility tax and many others. Applications and forms are available through the Division of Revenue or through other administrative agencies as prescribed by law.
1. New Economy Jobs Tax Credit
Title 30, Ch.20, S.9; Form 2080DE
An applicant for the New Economy Jobs Program must submit an application for certification as a qualified employer to the Secretary of Finance with a copy to the Director of Economic Development before any credits can be approved.
- Employers who add at least 200 new jobs in the state with an annual salary averaging $70,000, or 50 new jobs with salaries of at least $100,000 (indexed annually for inflation since 2007; $118,200 for tax year 2017) are eligible for the credit.
- The refundable credit may be claimed against the Corporate and Personal Income Taxes, Bank Franchise Tax, Insurance Premium Tax, Gross Receipts Tax, or most other State taxes.
- New Economy Jobs Tax Credits are available for up to 40% of the withholding taxes collected and paid on behalf of the new employees.
- Additional credits are available to employers that create new jobs in targeted growth zones, incorporated municipalities and former Brownfields sites that provide additional credits of up to 25% of the withholding taxes.
2. New Business Facility Tax Credits
Form 402AP 9901
An application must be completed and filed with the Division of Revenue prior to claiming any corporate income tax credits or reductions in lincense taxes pursuant to Chapter 20, Title 30, of the Delaware Code.
Encourages startup and investment into new business facilities.
- Eligible businesses must create 5 new jobs and provide a capital investment of $200,000 ($40,000 per employee). The minimum credit is $500 per employee hired and $500 per every $100,000 in capital investment.
- If the facility is located in a targeted area the credit increases to $750 per employee and $750 per $100,000 capital investment.
- Unused credits carry forward for up to 10 years.
- The non-refundable credit may be taken against the corporate or personal income tax, but amounts taken in any given tax year are capped at 50% of tax liability.
For businesses located on a former brownfield site within a targeted area, the New Business Facility Tax Credit increases to $900 per qualified employee and $900 per $100,000 capital investment.
Clean Energy Technology Device Manufacturers’ Credit
If eligible for the New Business Facility Tax Credit, a manufacturer of solar power devices, fuel cells, wind power devices, or geothermal power devices may receive a credit of $750 per new job rather than $500.
Public Utility Tax Credit
If eligible for the New Business Facility Tax Credit, a business is entitled to a 50% rebate of public utility taxes attributable to utility consumption due to a new facility or expansion of a facility. The rebate is available for 5 years.
Gross Receipts Tax Credit
Form 402LTR 9901
This computation schedule must be completed and submitted with each monthly and/or quarterly lincese tax return for which a tax reduction is claimed.
If eligible for the New Business Facility Tax Credit, a business is entitled to a reduction of 5% to 90% of the gross receipts tax attributable to the new facility over a period of ten years.
If eligible for the New Business Facility Tax Credit in a targeted area, a business is entitled to a reduction of 5% to 100% of the gross receipts tax attributable to the new facility over a period of 15 years.
3. Angel Investor Job Creation and Innovation Tax Credit
Title 30, Ch.20D Effective January 1, 2019. Sunsets after 2021. https://business.delaware.gov/incentives/
Eligible investors and businesses must be qualified and certified with the Delaware Division of Small Business prior to any credit being granted.
The Angel Investor Job Creation and Innovation Act creates a refundable Personal Income Tax credit for qualified investors in innovative, Delaware-based small businesses, to spur job creation and innovation.
- $10,000 minimum investment for an individual, $30,000 minimum for a fund.
- The credit is 25% of investment in qualiﬁed business.
- Total program funding is capped at $5 million annually.
- Cumulative tax credits for qualiﬁed investors are limited to $250,000 for married couples ﬁling jointly, $125,000 for individuals in any given tax year.
- No more than $500,000 in credits may be awarded for qualiﬁed investments in any one qualiﬁed business over all calendar years.
- Officers in a qualiﬁed business, or investors that control 20% or more of the business, are not eligible.
- Investors may claim the credit on their next Delaware tax return, so long as the investment has been held for at least six months.
- Include qualiﬁed high technology ﬁelds – aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, ﬁnancial technology, material sciences technology, nanotechnology, telecommunications, biotechnology, medical device products, pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar ﬁelds.
- Must be headquartered in Delaware.
- Must have at least 51% of common-law employees and 51% of total compensation paid for work provided be within Delaware.
- Use proprietary technology to add value to a product, process, or service in a qualiﬁed ﬁeld; research or develop a proprietary product or process in qualiﬁed ﬁeld.
- Must employ fewer than 25 individuals.
- Must not have been in operation for more than 10 years (more than 20 if working on FDA approval for product).
- Have not previously received private equity of more than $4 million.
- Other requirements may be found at delcode.delaware.gov/title30/c020d/index.shtml
4. Business Finder’s Fee Tax Credit
Title 30, Ch.20, S.10
Incentivizes existing companies to encourage customers, suppliers, and service providers to operate in Delaware. To qualify for tax credit, which may be claimed against the Bank Franchise Tax, Insurance Premium Tax, Personal and Corporate Income Taxes, the Gross Receipts Tax and the Public Accommodation Tax.
- The sponsor firm (Delaware business) and the new business (expanding to Delaware) must jointly file application.
- The new business must create or intend to create at least 3 full-time jobs.
- Both firms can claim a $500 annual credit of per each new full-time job.
- Eligible for up to 3 years after the new business certification date.
- The new business may not receive a New Economy Jobs Tax Credit and a Business Finder’s Fee Tax Credit.
5. Research and Development Tax Credits
Title 30, Ch.20, S.8; Form 2071AC0007
The Delaware Division of Revenue must first approve any taxpayer electing to qualify for the Delaware Research & Development Tax Credits. After receiving tax credit approval from the Delaware Division of Revenue, the amount of approved credit on Delaware Form 2071AC must be transferred to the appropriate line on Delaware Form 700.
This Credit promotes new research and development by lowering payments on taxable expenses. Two methods are available to determine the credit, which may be claimed against the Corporate and Personal Income Taxes.
- The credit is 10% of the excess of the total Delaware Qualified Research and Development Expenses for the taxable year over the taxpayer’s Delaware Base Amount, or 50% of Delaware’s apportioned share of the taxpayer’s research and development tax credit.
- Small businesses (under annual gross receipts of $20 million) are eligible for additional tax credit.
- The credit is refundable for tax years 2018 and thereafter.
6. Historic Preservation Tax Credit
Form 1811AC 0905, Form 1811CC 0701; https://history.delaware.gov/preservation/taxcredit.shtml
Promotes the rehabilitation of historic properties and continued use of historic properties rather than demolition. If approved by the State Historic Preservation Office, a credit of 20% to 40% of qualified expenditures is available. The credit is not refundable, but may be sold or transferred. Credits may be taken against Personal and Corporate Income Taxes and the Bank Franchise Tax.
7. Land and Historic Resource Conservation Tax Credit
Form 1801AC 0009
After approval, a gift of eligible land/properties to public agencies and certain non-profit organizations may result in a credit of 40% of the land’s fair market value (approved by Delaware State Historic Preservation Office) against the Personal and Corporate Income Taxes. The maximum credit cannot exceed $40,000 in a calendar year.
8. Neighborhood Assistance Tax Credit
Title 30, Ch.20, S.1; Form 2001AC 0104
Encourages investment in impoverished to moderate income locations. Tax credits against the Personal and Corporate Income Taxes can be given at 50% of the approved investment amount up to $100,000 per taxpayer every three years. Aggregate credits granted may not exceed $1,000,000 in any fiscal year. Must first receive approval (in the form of a letter) from the Director of the Delaware State Housing Authority.
9. Individuals with Disabilities Tax Credit
Title 30, Ch.20B
Incentivizes Delaware employers to hire job candidates referred by vocational rehabilitation facilities. The employer may receive a 10% tax credit against the Personal and Corporate Income Taxes, the Bank Franchise Tax, and the Insurance Premium Tax for 10% of the wages of qualified employees, up to a maximum credit of $1,500. Credits are available for the first 3 years of employment.