subject: RI Tax Credits Can Save Thousands for Manufacturing Businesses [print this page] RI Tax Credits Can Save Thousands for Manufacturing Businesses
However, weeding through the legalese of these credits is enough to give anyone a headache.
For example, a manufacturing tax credit was created to boost the state's disappearing manufacturing base. The state regulations say that to qualify, one of the criteria for qualification is as follows: "the employer's median annual wage paid to its full-time equivalent employees must be greater than the average annual wage paid by all employers in the state in the same two-digit SIC Code or corresponding NAICS code."
A more simplified version is this: Say you have eleven full-timers. List them from lowest to highest earners. The guy in the middle is the median. You have to pay that guy more than the average pay of your competitors' employees. If you do, you qualify for this tax credit.
You may also qualify, under the code, if: "the employer's median annual wage paid to its full-time equivalent employees is greater than or equal to 125 percent of the average annual wage paid by all employers in the state (you pay that middle guy more than the average Rhode Island worker); for manufacturing employers only - the average annual wage paid to the employer's full-time equivalent employees classified as production workers (as defined by the Department of Labor and Training) is greater than the average annual wage paid to all production workers in the state in the same two-digit SIC code or corresponding NAICS code. The firm invests 2 percent of total payroll costs in worker training."
Wading through these tax credits is worthwhile, because a business can qualify for up to half of its tax liability. That can be a hefty amount for some businesses, and could translate to thousands of dollars in savings. Perhaps the easiest way to qualify for the tax credit is to simply invest that 2 percent of payroll costs into training. However, it may be less expensive to pay your employees more to qualify.
How you qualify depends upon your payroll costs and number of full-time employees, as well as what you're paying that median employee.
Jane Goodger, former national editor of a top business magazine, now writes about Rhode Island business and employment issues. She focuses on recruitment at http://www.RIjob.com.
