City tax incentives available for small businesses

The City of Detroit is promoting a program called "Owe Less to the IRS" to get the word out to existing and potential small businesses in Detroit about available tax incentives. Through both the Empowerment Zone (EZ) and Renewal Communities (RC) programs, businesses located in specific geographic areas are eligible for tax breaks ranging from $2,400 to millions of dollars.

The EZ has Southwest, Central and East areas and Renewal Communities is located in the northeast sector of the city. Maps are available -- for EZ, here and for RC, here.

Both programs include variations of the following programs:

• employment credits, which gives a deduction to employers for employees they hire that live in the respective zone;
• work opportunity tax credits, that are similar deductions for the hiring of employees aged 18-24 or others that have special employment needs;
• an increased section 179 deduction on equipment that depreciates;
• capital gains exclusions of up to 60% for small business stock investment;
• academy bonds that can be issued at 0% interest to finance programs with public schools; and
• facility bonds that can be issued at lower interest rates for construction costs.

The Empowerment Zone's Brian Watkins says, "We are making our push in tax time to put the word out, to get the word out. The city wants to save you real dollars on your tax burden." The ultimate goal of both programs is increased investment that leads to an increase in job opportunities for residents of the zones.

Both programs expire in 2009, although an extension is possible. For more information, call the Empowerment Zone at 313.224.1336 and Renewal Communities at 313.224.1281.

Sources: Brian Watkins, EZ and Loretta Rivers, RC
Writer: Kelli B. Kavanaugh