Top 10 Questions to Ask About Business Incentives in the U.S.

Whether you’re expanding, relocating, or launching a new project, navigating U.S. business incentives can be complex. Here are the top 10 questions every company should ask to maximize opportunities and avoid missteps:

1. How do incentives vary by location?
   Tax and incentives compositions differ significantly across local jurisdictions and applicability is industry-dependent. Those differences are only amplified as you move up the chain to state and federal programs. Aligning your project with regional priorities and your industry with a favorable long-term tax climate is key to maximizing value and avoiding roadblocks.
2. What is the “but for” clause – and why does it matter?
   Most incentives require a competitive justification: you must show that your project might happen elsewhere “but for” the incentive. Without this argument, jurisdictions may see no need to offer support.
3. What makes a project appealing for incentives?
   Top factors include: job creation and wages, capital investment, and workforce development. Other advantages to a project: locating in redevelopment zones, low-income census tracts, or within priority industries. Community engagement can also boost your position.
4. How does each incentive program work – and what are the strings attached?
   Incentives come in many forms: tax credits, grants, abatements, forgivable loans, reimbursements, and more. Make sure you know: what goals you must meet, how incentives are calculated and paid, the timeline for disbursement, and reporting and compliance requirements.
5. What does the application process look like?
   Generally, the process includes: (1) introductory meetings with economic development agencies, (2) application submission, (3) negotiation of your incentive package, (4) public approvals (where required), and (5) execution of agreements. Most processes take 2-3 months, but this can vary.
6. When should we start the process?
   Before you sign a lease, hire employees, or pull permits. Incentives are almost always prospective, not retroactive. Early engagement preserves eligibility.
7. Do we need consultants or legal counsel?
   In most cases, yes – especially for large or multi-state projects. Consultants and legal advisors can: enhance your negotiating position, help structure clear and favorable agreements, manage compliance to ensure benefit is realized/maximized, and avoid costly errors.
8. What happens if we don’t meet our goals?
   Failure to meet stated goals (e.g. hiring fewer people than promised) may result in: repayment of incentives and/or loss of benefits. Conversely, exceeding goals may open the door to additional incentives or renegotiation – generally via a secondary, discreet project. Set realistic targets up front.
9. What does compliance look like after approval?
   Expect quarterly or annual reporting – such as: job and wage documentation, investment updates, tax filings or other performance data. Missing deadlines or incomplete documentation can jeopardize your incentives.
10. What are the most common mistakes companies make?
    • Starting the process too late
    • Making announcements or hires before applying for incentives
    • Failing to establish a competitive “but for” case
    • Overpromising goals
    • Lack of clarity/specificity/alignment with operations in exact agreement commitments
    • Lacking documentation
    • Missing reporting deadlines

Successfully expanding, relocation, or launching a new project in the U.S. demands a strategic approach to site selection and a deep understanding of economic incentives. At KSM Location Advisors, we specialize in helping companies identify the right locations, secure meaningful incentive packages, and ensure compliance throughout the life of the project.

Contact us today to learn how we can help you maximize opportunity and position your company for long-term success.