HQ Hustle: How States Are Incentivizing Companies to Set Up Shop

Manufacturing is often hailed as the poster child for economic development. Many communities actively seek manufacturing businesses through incentives due to its substantial capital investment, job creation, and community identity (e.g., “Made in [State]” label). However, these economic incentives are not solely reserved for the manufacturing sector, as communities increasingly strive to diversify their business landscape.

As a result, more incentives are available for companies looking to relocate their corporate headquarters (HQ). A headquarters is broadly defined as the primary central administrative office where crucial functions such as financial, personnel, administrative, legal, planning, and similar business activities are conducted. States across the country are actively encouraging companies to relocate HQs to their communities. This is crucial for companies to consider, as relocating to a new area can result in lower business expenses, access to previously untapped consumer markets, and a larger pool of skilled workers.

Arizona seized the opportunity presented by companies fleeing California due to escalating business costs. The state not only welcomed them but also provided incentives, notably the Qualified Facility tax credit, a refundable income tax credit specifically including HQ operations as an eligible industry.

While manufacturing allows a state to proudly claim a tangible product, economic development authorities acknowledge the prestige associated with HQ operations. Moreover, HQs often promise high-wage jobs and attract a talented workforce to the area.

Indiana and Tennessee exemplify states fully capitalizing on the promises of HQ relocation by offering HQ-specific tax credits. Indiana’s Headquarters Relocation Tax Credit offers a refundable tax credit to competitive projects seeking to conduct HQ business in the state. Similarly, Tennessee’s Headquarters Tax Credit exempts sales and use tax, with the exception of a minimal 0.5% tax on the sales of building materials, equipment, furniture, and fixtures.

At McGuire Sponsel, we assist clients in navigating the optimal location for their HQ relocation. Combining national economic development, tax, and financial expertise, our Location Advisory team aims to maximize client benefits, bridge financing gaps, and provide a competitive advantage for HQ projects. If you’re interested in learning more about the process, don’t hesitate to reach out to us.