Alternative Rate of Tax on Machinery or Equipment
The alternative rate of tax on machinery or equipment incentive provides a sliding scale of decreasing taxation on large purchases of manufacturing equipment. Companies that invest over $5 million in a calendar year on qualified manufacturing machinery or equipment are eligible to participate in this program.
As purchase amounts increase, the amount of the 2% City sales tax that the company has to pay decreases on a sliding scale. On purchases in excess of $20 million in a calendar year, the entire 2% City sales tax is returned to the company as an incentive.
Qualified Purchase Amounts | Rate of Tax |
Purchases of $0.01 to and including $4,999,999.99 | 2.5 percent |
Purchases of $5,000,000.00 to and including $7,500,000.00 | 2 percent |
Purchases of $7,500,000.01 to and including $10,000,000. 00 | 1 1/2 percent |
Purchases of $10,000,000.01 to and including $15,000,000.00 | 1 percent |
Purchases of $15,000,000.01 to and including $20,000,000.00 | 0.5 percent |
Purchases in excess of $20,000,000.00 | No tax |
City Business Development Division staff:
- writes the Economic Development Agreement between the company and the City, which includes the alternative tax rate on machinery or equipment incentive component
- partners with City Revenue and Collections staff to obtain the annual incentive amount for which each company is eligible
- prepares required forms and supporting documentation to City Finance staff to ensure company receives annual incentive check