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Federal Incentives

Foreign Trade Zone

A foreign-trade zone is a designated location in the United States where companies can use special procedures that help encourage U.S. activity and value added – in competition with foreign alternatives – by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings. A site which has been granted zone status may not be used for zone activity until the site has been separately approved for FTZ activation by local U.S. Customs and Border Protection (CBP) officials, and the zone activity remains under the supervision of CBP. FTZ sites and facilities remain within the jurisdiction of local, state or federal governments or agencies. Sun Corridor Inc. is the administrator for FTZ #174 and our staff can provide additional information as well as assist with application documentation.

Opportunity Zones

The federal Opportunity Zones program was created under a provision of the Tax Cuts and Jobs Act. Investors who reinvest capital gains monies in Opportunity Zone funds will receive reductions on capital gains taxes relative to the years of their investment. (Source: Arizona Commerce Authority)

View a map of Opportunity Zones in Tucson and Southern Arizona.

  • Investments held 10 years: taxable amount of the capital gains reinvested is reduced by 15% and no tax is owed on appreciation.
  • Investments held 7 years: taxable amount of the capital gains reinvested is reduced by 15%.
  • Investments held 5 years: taxable amount of the capital gains reinvested is reduced by 10%.

Work Opportunity Tax Credit (WOTC)

The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) retroactively allows eligible employers to claim the Work Opportunity Tax Credit (WOTC) for all targeted group employee categories that were in effect prior to the enactment of the PATH Act. The Work Opportunity Tax Credit (WOTC) is a federal tax credit of up to $9,000 that Congress provides to private-sector businesses for hiring individuals from nine target groups who have consistently faced significant barriers to employment.

The Arizona Department of Economic Security administers the WOTC program in Arizona. Learn more.

Federal Small Business Programs

The Small Business Administration (SBA) has taken the lead in defining what constitutes a small business in the eyes of the federal government, and the SBA’s definition is the most widely used.

This body of definitions is called “size standards” and can be found in Title 13 of the Code of Federal Regulations (CFR), Part 121. Small business is defined using size guidelines for the different categories of business enterprises, which include agricultural production, communications, manufacturing, retail, service, transportation and warehousing, and wholesale. Subcategories are included under each of these headings.

Size is determined by the amount of average annual receipts or by the number of employees. Service businesses generally have a size standard that would be determined by averaging your gross annual receipts for the last three years. This average is then linked to the North American Industrial Classification System (NAICS) code for the procurement you are looking to compete under. If your average annual receipts falls under the amount designated for that NAICS code, then your firm is considered to be small by definition. For example, if you were selling Computer Programming Services under NAICS code 541511 your average annual receipts over the past three years would have to be below $21.0 million to qualify as a small business concern. For most manufacturing NAICS codes, the number of employees will be used as a size standard. For example, a mining firm is considered “small” if it has fewer than 500 employees. (Source: US Treasury)

Small Business Innovation Research Program (SBIR)

The mission of the SBIR program is to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy. Each year, Federal agencies with extramural research and development (R&D) budgets that exceed $100 million are required to allocate 2.8 percent of their R&D budget to these programs.

Small Business Technology Transfer Program (STTR)

The STTR is another program that expands funding opportunities in the federal innovation research and development (R&D) arena. Central to the program is expansion of the public/private sector partnership to include the joint venture opportunities for small businesses and nonprofit research institutions. Each year, Federal agencies with extramural research and development (R&D) budgets that exceed $1 billion are required to reserve 0.3% of the extramural research budget for STTR awards to small businesses.

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