Give Yourself Some Credit: Tax Incentives

» Articles » Construction Articles » Article

April 12, 2006

What is a tax credit? A tax credit differs from an income tax deduction. An income tax deduction lowers the amount of income subject to taxation. A tax credit, however, lowers the amount of tax owed. In general, a dollar of tax credit reduces the amount of regular income tax owed by one dollar.* Thus, credits are better than deductions. The following list outlines just a few of the various credits that your business may qualify for.

Federal Historic Preservation Tax Incentives

The rehabilitation credit applies to costs you incur for rehabilitation and reconstruction of certain buildings. Rehabilitation includes renovation, restoration, and reconstruction. The credits apply to buildings placed in service before 1936, and certified historic structures.

Low Income Housing

Continue reading below

FREE Construction Training from Lorman

Lorman has over 38 years of professional training experience.
Join us for a special white paper and level up your Construction knowledge!

Best Practices for Measuring and Documenting Construction Delays

Learn More

The low income housing credit applies to the acquisition and rehabilitation, or new construction of low-income housing. The units must be rent restricted and occupied by individuals with incomes below the area median gross income. Credits are allocated by State housing credit agencies.

Foreign Tax Credit

If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to a credit to reduce your U.S. tax liability.

Credit for Federal Tax Paid on Fuels The federal government charges an excise tax on some fuels which is used to pay for highway repairs. The IRS currently allows a credit for undyed diesel fuel that is used for off-highway business use.

Disabled Access Credit

The disabled access credit is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons who have disabilities. You must pay or incur the expenses to enable your business to comply with the Americans with Disabilities Act of 1990.

Empowerment Zone Credit

You may qualify for this credit if you have employees and are engaged in a business in an empowerment zone or renewal community for which the credit is available.

Welfare-to-work Credit

The welfare-to-work credit provides businesses with an incentive to hire long-term family assistance recipients.

Energy Efficient Home Credit

This credit is available for eligible contractors of certain homes sold for use as a residence after December 31, 2005.

Enterprise Zone credit

The EZ Program targets economically distressed areas throughout various states. Special state and local incentives encourage business investment and promote the creation of new jobs. There are over 40 enterprise zones currently designated in Oregon, 39 located throughout California, and many in other states as well.

*Tax credits may not provide the same benefits for taxpayers subject to the Alternative Minimum Tax.

More Construction Articles

The material appearing in this web site is for informational purposes only and is not legal advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. The information provided herein is intended only as general information which may or may not reflect the most current developments. Although these materials may be prepared by professionals, they should not be used as a substitute for professional services. If legal or other professional advice is required, the services of a professional should be sought.

The opinions or viewpoints expressed herein do not necessarily reflect those of Lorman Education Services. All materials and content were prepared by persons and/or entities other than Lorman Education Services, and said other persons and/or entities are solely responsible for their content.

Any links to other web sites are not intended to be referrals or endorsements of these sites. The links provided are maintained by the respective organizations, and they are solely responsible for the content of their own sites.