Monetizable State Economic Development Incentives

First-time FDI projects, which are used by international companies to establish businesses in the United States, are on the rise. FDI projects have needs different from the needs of a U.S. business established by a U.S.-based company. For example, FDI projects often require significant upfront capital to establish facilities, business infrastructure, and supply chain networks from scratch in the U.S. before they generate local revenue. FDI projects also face high costs and significant challenges associated with navigating complex federal, state, and local compliance requirements that are new and unfamiliar. Additionally, an FDI project has to build a new U.S. workforce and market presence, incurring costs for recruitment, training, and cultural integration before revenues stabilize.

The unique burdens associated with FDI projects often result in delayed profitability. Despite these challenges, FDI projects might be eligible for state and local tax incentive programs. Companies initiating FDI projects often overlook these incentive programs, mistakenly believing that they have no value in years that FDI projects are not subject to state income taxes. However, many states offer monetizable incentives that can provide immediate cash flow regardless of a company’s income tax position, which can be valuable for FDI projects.

Crowe observation

Effectively planning FDI projects before committing investment dollars to a U.S. location can unlock advantages – from reducing project timelines to potentially securing immediate, tangible cash flow benefits that strengthen an investor’s early-stage position.

Below are examples of monetizable state incentive programs that are available and that should be considered to support FDI projects.

1. Indiana: Economic development for a growing economy (EDGE) tax credit

The EDGE tax credit is available to companies in qualified industries creating net-new jobs in Indiana.

The EDGE tax credit is a refundable corporate income tax credit calculated as a percentage (up to 100%) of the increase in employee state withholding from the new jobs. The state-certified credit can phase-in annually for up to 20 years, matching an FDI project’s hiring horizon. If the credit exceeds current tax liability, the excess is paid back in cash.

Crowe observation

It is unclear what effect Indiana's recent state budget, passed on May 6, 2025, and the governor’s economic development priorities will have on the Indiana Economic Development Corporation and its ability to award the EDGE incentive.

2. Ohio: Job creation tax credit (JCTC)

The JCTC is available for projects that create new Ohio payroll in eligible industries. The credit is negotiated through an agreement with the Ohio Tax Credit Authority.

The JCTC is a refundable credit calculated as a percentage of created payroll. It can be claimed against multiple Ohio taxes, including the commercial activity tax. If the credit exceeds tax liability, the balance may be refunded. Rates and terms are negotiated in the agreement. An approved taxpayer may expect a common cash return of 1% to 3% of a project’s investment over five to 15 years – with longer terms possible for state-designated megaprojects.

3. South Carolina: Job development credit (JDC)

The JDC is available to capital-intensive manufacturers and large employers that satisfy industry, job, and investment requirements and execute a revitalization agreement with the state’s coordinating council.

The JDC is a credit against employee state withholding, taken on a quarterly withholding return. The credit is calculated as a percentage of gross wages (that varies by county tier and wage level) and is available for a multiyear period. If the credit exceeds the amount of withholding tax the company owes, then the excess can be refunded to the company. The refundable nature may be valuable in the early years of a project before significant labor is used.

4. North Carolina: Job development investment grant (JDIG)

The JDIG is available to large projects in eligible industries that satisfy wage and investment thresholds (depending on county tier and the JDIG type).

The JDIG provides performance-based cash grants paid directly to the company. Each annual payment equals a share of the personal income tax withholdings from eligible positions. The company share typically ranges from 10% to 80%. Special categories, such as high-yield projects and transformative projects, can raise the share up to 100% and can extend the term (for example, up to 40 years for transformative projects).

5. Texas: Jobs, Energy, Technology, and Innovation Act (JETI)

The JETI program is available to capital-intensive facilities in eligible industries that satisfy job and investment minimums (these requirements are based on county population) and secure approvals from the governor’s office and the local school district.

The JETI authorizes a 10-year limitation on the appraised value used to calculate school district maintenance-and-operations property taxes. Agreements are executed by the company, the school district, and the governor’s office. Projects sited entirely in a qualified opportunity zone might qualify for a greater reduction under program rules. The benefit is realized directly through lower annual property tax bills, allowing companies to capture value in the absence of income tax liability.

Looking ahead

State economic development incentives such as refundable tax credits, payroll withholding-based programs, cash grants, and property tax relief can inject liquidity into FDI projects during times of income tax losses. To capture these benefits, companies should consult their tax advisers to evaluate how to unlock U.S. economic development incentives, including state and local incentives that provide immediate cash flow benefit, before committing to a U.S. location for an FDI project.