Interpreting Tax Law: Corporate Tax Incentives

Corporate Tax Incentives are the deductions or exemptions provided by the government to entice a company to do business. A corporate tax includes different taxes that can be levied by state and federal government agencies on the proceeds of a company. Providing incentives is an effective way to keep big businesses within certain states and within the country.

The Company Tax Incentive

Understanding how corporate tax works will help to figure if an incentive is worth the deduction offered. States can decide what tax incentives to offer companies to lure them to do business in their state. Many states feel that the cost involved for tax credits to a company are outweighed by the jobs and benefits that the company brings to their state.

Examples of Incentives

There are different types of incentives that can be offered. For example, there is the solar tax incentive. The solar incentive gives big companies tax breaks so that they can build and reduce the energy costs. Incentives that benefit both the state and company are the most popular type of incentive. For example, the corporate tax incentive gives companies what they want and allows the state to keep some of the profit.