Special Tax Benefits Still Available in 40 Designated Empowerment Zones

Eligible businesses can still claim Empowerment Zone tax benefits through the end of this year. Empowerment Zones are certain urban and rural areas where employers and other taxpayers qualify for special tax benefits.

The Department of Housing and Urban Development and the Department of Agriculture designated 40 economically distressed locations as empowerment zones. Find a list of them in the instructions to IRS Form 8844. Partnerships and S corporations must file this form to claim the credit. All others are generally not required to complete or file this form if their only source for this credit is a partnership, S corporation, estate, trust, or cooperative. Instead, they can report this credit directly on Form 3800, General Business Credit. The following exceptions apply. You are an estate or trust and the source credit can be allocated to beneficiaries. For more details, see the instructions for Form 1041, Schedule K-1, box 13, code K. You are a cooperative and the source credit can or must be allocated to patrons. For more details, see the instructions for Form 1120-C, Schedule J, line 5c.

 

Empowerment Zones Urban areas

Parts of the following urban areas were empowerment zones. You can find out if your business or an employee’s residence is located within an urban empowerment zone by using the EZ/RC Address Locator at www.hud.gov/crlocator.

  • Pulaski County, AR
  • Tucson, AZ
  • Fresno, CA
  • Los Angeles, CA (city and county)
  • Santa Ana, CA
  • New Haven, CT
  • Jacksonville, FL
  • Miami/Dade County, FL
  • Chicago, IL
  • Gary/Hammond/East Chicago, IN
  • Boston, MA
  • Baltimore, MD
  • Detroit, MI
  • Minneapolis, MN
  • St. Louis, MO/East St. Louis, IL
  • Cumberland County, NJ
  • New York, NY Syracuse, NY
  • Yonkers, NY
  • Cincinnati, OH
  • Cleveland, OH
  • Columbus, OH
  • Oklahoma City, OK
  • Philadelphia, PA/Camden, NJ
  • Columbia/Sumter, SC
  • Knoxville, TN
  • El Paso, TX
  • San Antonio, TX
  • Norfolk/Portsmouth, VA
  • Huntington, WV/Ironton, OH

 

Key Empowerment Zone tax benefits include:

  • Empowerment Zone Employment Credit. Eligible employers can claim this credit on Form 8844. It is worth up to $3,000 and is available to businesses based on wages paid to each qualified employee who both lives and works in an empowerment zone,
  • Increased expensing for qualifying depreciable property,
  • Tax-exempt bond financing,
  • Deferral of capital gains tax on the sale of qualified assets sold and replaced, and
  • Partial exclusion of capital gains tax on certain sales of qualified small business stock.