Changes to Wisconsin’s Business Development Tax Credit

Effective March 23, 2024, and applicable to tax years beginning after December 31, 2023, the Wisconsin legislature passed Assembly Bill 627 with bipartisan support, introducing significant changes to the state’s primary incentive, the Business Development Tax Credit (BDTC). This bill directly addresses the state’s workforce challenges, including issues such as access to childcare, availability of workforce housing, scarcity of labor, and the growing shift to automation.

The bill’s main objective is to resolve housing and childcare issues while simultaneously fostering investment from new and existing businesses. The introduction of amendments for enhanced credits for investments in childcare services and workforce housing, alongside a shift in focus from employment-based requirements to investment criteria, supports this goal.

Businesses are now allowed a 15% credit on their investments toward workforce housing and childcare facilities. This measure seeks to mitigate the financial burden of childcare and housing for Wisconsin’s workforce, and public officials hope that the offer of childcare and housing will also attract new residents to the state.

Arguably, the biggest change to the BDTC is that participation no longer relies on meeting job creation quotas. This is particularly beneficial to existing businesses that need to close the financing gap for replacing old machinery or making renovations but do not need additional employment. The rationale behind this shift towards investment-centric criteria is to encourage the retention of existing employees while acknowledging the challenges of recruitment in today’s economy and the trend towards automation.

Apart from those two major amendments, the bill introduces several other noteworthy updates. The bill enables the carryforward of any unused credits from previously closed awards in addition to the $22 million in tax credits already allocated. Additionally, it mandates that the Wisconsin Economic Development Corporation review applications within a 90-day period, promoting efficiency in decision-making and aiming to secure more competitive projects. Further, eligibility criteria have been updated to include hybrid and remote workers based at the project site rather than necessitating their physical presence at the location.

These amendments highlight the Wisconsin legislature’s forward-thinking approach to adapting to the evolving business landscape and enacting policies that serve the interests of both corporate stakeholders and constituents.

If your client is a Wisconsin-based company looking to invest in their current facility and retain/expand employment opportunities, job creation, training, and capital investment credits may be available.

As tax credits and incentives are updated and modernized to better serve businesses, McGuire Sponsel stays current with the changes and has the expertise to offer guidance on emerging requirements and opportunities.

The firm’s Location Advisory team works nationally to procure and maximize incentives and aid in post-project reporting compliance. Reach out to start a conversation and our team will navigate the rest for you and your clients.