An IDA tax abatement is a financial incentive provided by a local Industrial Development Agency (IDA) that reduces or eliminates certain taxes for businesses to encourage them to invest, build, or expand in a specific area.

What is an IDA Tax Abatement?

• Tax Reduction: It reduces or removes property taxes, sales taxes on materials and equipment, and mortgage recording taxes for a period.
• Economic Incentive: It is used to attract businesses, support expansions, and create jobs.

How can a business receive an IDA Tax Abatement?

1. Application: The business must apply to the local IDA with a detailed plan of their proposed project.
2. Review: The IDA reviews the application to assess the project’s potential benefits, such as job creation and economic impact.
3. Approval: If the project meets the IDA’s criteria, the business and the IDA enter into an agreement detailing the terms of the tax abatement.
4. Compliance: The business must follow the terms of the agreement and typically provide regular updates to the IDA to show that they are meeting their commitments, such as creating jobs or investing a certain amount of money.

Example

• A manufacturing company plans to build a new factory: They apply for an IDA tax abatement, providing details on job creation and investment.
• If approved, they might receive: A reduction in property taxes for 10 years, exemption from sales taxes on construction materials, and exemption from mortgage recording taxes.

This makes the project more affordable and attractive for the business, encouraging them to proceed with their investment in the local area.