Realizing the important role tax incentives play when competing for job creation projects, Pennsylvania, in partnership with the local taxing bodies and economic development agencies, has created an innovative tax abatement program; the Keystone Opportunity Zone.
The Keystone Opportunity Zone (KOZ) Program represents one of the boldest economic development incentives in the nation because it empowers local communities and has fostered unique state/local and public/private partnerships to authorize the abatement of most state and local taxes for a designated period of time.
Designed to revive underutilized properties, the property-specific KOZ program offers a moratorium on most local and state taxes through December 31, 2017, and in some instances, December 31, 2019.
In Greater Hazleton, CAN DO’s portfolio includes land and specific buildings that have had their tax-exempt status extended to December 31, 2017. Additional acres in Humboldt Northwest were given KOZ subzone approval through December 31, 2019.
Download an information flyer highlighting the KOZ program with a sample savings analysis.
Taxes Eliminated
Binding ordinances and resolutions were passed granting the waiver, abatement or exemption of certain state and local taxes. Your company’s tax burden may be reduced to zero through a number of exemptions, deductions, abatements and credits for the following taxes:
State Taxes
- Corporate Net Income Taxes
- Capital Stock & Foreign Franchise Tax
- Personal Income Tax
- Sales & Use Tax
- Bank Shares and Trust Company Shares Tax
- Alternative Bank and Trust Company Shares Tax
- Mutual Thrift Institutions Tax
- Insurance Premiums Tax
Local Taxes
- Local Real Property Tax
- Sales & Use Tax
Length of tax relief KOZ status extends through December 31, 2017, and December 31, 2019.
Estimated Tax Savings Example for a KOZ property in Hazle Township, Luzerne County:
| Corporate Net Income Tax Example | |
| Nationwide Net Income: | $2,000,000 |
| Percentage of U.S. Business in PA | 60.00% |
| Estimated PA Taxable Income | $1,200,000 |
| PA Corporate Income Tax Rate | 9.9% |
| Estimated Annual Corporate Net Income Tax | $119,880 |
| PA Sales and Use Tax Example | |
| Start-up Taxable Investment in KOZ | $1,500,000 |
| Annual Taxable Purchases in KOZ | $513,930 |
| Percentage of PA Business in KOZ | 100% |
| Sales Tax Rate (State) | 6.00% |
| Estimated Taxable Purchases/Investment | $2,013,930 |
| Estimated Sales and Use Tax on Purchases | $120,836 |
| Real Property Tax Example | |
| Real Property | $15,000,000 |
| Assessed Value | $15,345,000 |
| Millage Rate | 16.2255 |
| Estimated Real Property Tax | $248,980 |
| Percentage of KOZ Tax Abatement | 100% |
| Estimated KOZ Abatement on Real Property Taxes | $248,980 |
| Estimated KOZ savings Year 1 | $489,696 |
Eligibility
A business relocating from outside Pennsylvania into a KOZ is not subject to any relocation provisions. Such a business must simply own or lease real property in a KOZ from which it actively conducts a trade, profession or business and obtain annual certification from the Pennsylvania Department of Community and Economic Development.
To be eligible, you must have a project that dramatically impacts the local economy and/or its workforce. If a Pennsylvania-based company is relocating an operation from a non-KOZ into one of the zones, then it must increase its full-time employment by at least 20 percent in the first full year of operation or make a 10-percent capital investment in the zone based on its prior year’s gross revenues.
Eligibility for benefits is based upon annual certification. In order to receive benefits, any entity applying must be compliant with all local and state taxes and building and zoning codes.
To view the KOZ guidelines and application, click here.