Incentives

Here is an overview of state programs that are designed to assist in the creation or retention of jobs within the state's rural counties.  A rural county is defined as a county with a population density of less than 100 people per square mile.  Currently, 31 counties qualify as rural counties. The rural economic programs and incentives are divided into the categories of direct financial assistance and tax incentives.

 

For more detailed information on these programs, please consult the Department of Revenue or the Community Trade and Economic Development Department websites.

 

DIRECT FINANCIAL ASSISTANCE

The programs in this category provide direct financial assistance (1) to communities to assist in the financing of infrastructure that is necessary for business expansion or retention or (2) to businesses that either increase or retain their employment in the community.  These programs usually provide state funds for infrastructure financing and federal funds for direct loans to businesses.  Most, but not all, of these programs are administered through the State's Community, Trade and Economic Development Department.

 

Rural Washington Loan Fund: The Washington Rural Loan Fund provides favorable repayment term gap financing to businesses that will create new jobs or retain existing jobs, particularly for lower-income persons. The program uses federal funds to provide resources for businesses in rural counties, distressed counties, and selected geographic areas (Chapter 43.168 RCW). 

 

Community Economic Revitalization Board (CERB): The CERB program provides financial assistance through loans and grants to counties, cities, and port districts. The moneys can be used to finance public facilities that result in the creation, retention, or expansion of jobs. Priority for funding is given to projects located in rural counties (Chapter 43.160 RCW).

 

Community Development Block Grant (CDBG) Float Loan Program: The CDBG Float Loan program uses federal CDBG funds as a source of interim financing for business projects that are able to secure an irrevocable letter of credit and are willing to commit to making jobs available to low-income people. The program is limited to businesses located in federal nonentitlement areas of the state.  These areas are mainly the state's rural counties.

 

Section 108 Loan Program: The Section 108 Loan program is used to attract and leverage private-sector funds for business expansion by pledging future federal CDBG funds, received by the state, as security for loans that meet federal criteria for job creation for lower income persons. The program is limited to businesses located in federal nonentitlement areas of the state.  These areas are mainly the state's rural counties.

 

Washington Economic Development Finance Authority (WEDFA): The WEDFA provides below-market rate financing, through the issuance of tax-exempt bonds, to credit-worthy small manufacturing and processing companies.  The financing is limited to a maximum of $10 million per project.  The WEDFA is required to conduct intensive marketing and outreach efforts in the state's distressed counties (Chapter 43.163 RCW). 

 

Local Option Sales and Use Tax for Public Facilities in Rural Counties: Rural counties are authorized to impose a sales and use tax at the rate of .08 percent.  The tax is credited against the state sales tax so there is no difference in the total tax rate paid by the consumer.  Moneys collected under the tax must be used to finance public facilities in rural counties.  Eligible counties began imposing the tax after July 1, 1998. A county may only impose the tax for 25 years after it is first adopted (RCW 82.14.370). 

 

 

TAX INCENTIVES

Programs in this category provide either a general or targeted tax reduction, through the use of tax credits or exemptions, to specific industries.  Again, for more information on these tax incentives you can contact the Legislation and Policy Division of the State Department of Revenue at 360-570-6128.

 

1. Tax Deferrals for Investment Projects in Rural Counties: This program provides a waiver of state and local sales and use taxes on equipment purchases and building construction.  Qualified businesses must be engaged in manufacturing, research and development, or computer-related activities and be located in specific geographical areas.  Eligibility is limited to businesses located in: (a) a rural county; (b) a community empowerment zone; or (c) a county that contains a community empowerment zone.  Businesses located in community empowerment zones or in counties containing such zones are required to meet specific employment requirements (Chapter 82.60 RCW).

Click here to download the application

 

2. Rural Area B&O Tax Credit for Job Creation: The distressed area business and occupation (B&O) tax credit for job creation program provides a credit against the B&O tax for each new employment position created.  The credit is $4,000 for each job when wage and benefits exceed $40,000, and $2,000 for other jobs.  Qualified businesses must be engaged in manufacturing, research and development, or computer-related activities and be located in specific geographical areas. The business must increase employment at the project by 15 percent.  Eligibility is limited to businesses located in (a) rural counties, or (b) community empowerment zones (Chapter 82.62 RCW).

Click here to download the application

 

3. B&O Tax Credit for Software Programming/Manufacturing in Rural Counties: Businesses located in a rural county may take a credit against their B&O tax liability for the manufacturing or programming of software.  The credit is equal to $1,000 per year for each qualified employment position.  The tax credit may be taken for a period up to four years provided the employer maintains the qualified employment position. (RCW 82.04.4456).

 

4. B&O Tax Credit for "Help Desk" Activities in Rural Counties: Businesses located in a rural county may take a credit against their B&O tax liability for engaging in the activity of providing information technology help desk services.  The credit is equal to 100 percent of the businesses B&O tax liability. (RCW 82.04.4457).

 

B&O Tax Credits for Employee Job Training: Businesses engaged in manufacturing, research and development and computer service activities may take a credit against their B&O tax for employee job training.  The business must be located in (a) a rural county; or (b) a community empowerment zone; or (c) a county that contains a community empowerment zone. The job training must be related to the employment position and provided at no charge to the employee.  The tax credit is equal to 20 percent of the value of the job training not to exceed $5,000 per business per year. The job training must be approved by the Employment Security Department prior to taking the tax credit (RCW 82.04.4333).

 

Electric Utility Rural Economic Development Revolving Fund: Provides a credit against the public utility tax of a light and power company for contributions made to a local electric utility rural economic development fund.  The money must be used to fund projects designed to achieve job creation or business retention in a rural county or geographic area that is served by a small light and power business.  All repayments to the fund must be used to fund additional projects.  The tax credit is equal to 50 percent of the contribution. No more than $300,000 in tax credits can be awarded in a fiscal year.