SALT Credits & Incentives: The Playbook - Part III

In Part I and Part II of our SALT Credits and Incentives: The Playbook series, we explored why state and local credits and incentives matter, the types of projects that tend to benefit most, and the most common incentives taxpayers are likely to encounter.

In Part III, we move beyond the “what” and the “who” and turn our attention to how the process actually works. Unlike a traditional one time tax filing, credits and incentives are typically a multi-year effort that begins well before a project breaks ground and continues long after it is completed. From early planning and timing considerations to documentation, performance tracking, and ongoing compliance, this is where incentives move from concept to execution.

Most SALT C&I projects follow three core phases:

1. Discovery, analysis, and strategy
2. Application, negotiation, and approval
3. Performance, compliance, and benefit realization 

A critical takeaway: incentives are not automatic. Success depends on timing, accurate project modeling, thoughtful negotiation, and disciplined follow through. Missing an application window, underestimating documentation requirements, or failing to track performance milestones can significantly reduce—or even eliminate—the value of an incentive. Understanding the process upfront allows businesses to move forward strategically and avoid costly missteps.

Phase 1: Discovery, Analysis, and Strategy

The first phase focuses on identifying which credits and incentives are available—and, just as importantly, which ones are realistically attainable—before a business commits to a location, investment, or hiring plan. This is the planning stage where incentives are evaluated as part of the broader project decision making process, not after the fact.

What happens in practice

To begin, Matt Carlson and the incentives team works closely with the business to gather detailed project facts. These details form the foundation of all incentive analysis and typically include:

• Planned capital expenditures, such as land acquisition, building construction, and equipment purchases
• Hiring projections, including anticipated job counts, wages, and benefits
• Project timing, including expected start dates, construction schedules, and ramp up periods
• Locations under consideration, whether comparing states, cities, or staying put versus expanding elsewhere

These inputs allow the team to understand not only the size and scope of the project, but also how it aligns with state and local economic development priorities.

Research and modeling

Once the project facts are established, the team evaluates incentives across each potential location. This typically involves:

• Researching statutory incentives available under state and local law
• Evaluating discretionary incentives offered by economic development agencies
• Modeling potential benefits and estimating return on investment under different scenarios

The outcome of this phase is usually a deliverable that outlines available incentive opportunities, estimated benefit values, and key requirements. This allows the business to compare locations side by side and understand how incentives may impact overall project economics as seen in our case study. 

Best Practices in Incentives Procurement—Area Development, Amy Gerber & Kathy Mussio:

Timing is critical

Many incentive programs require that applications and negotiations occur before a project begins or is publicly announced. Missing this window can permanently disqualify a project, regardless of how well it would otherwise qualify.

Follow the Incentives: State and Local Competition Heats Up for Corporate Projects—Location Advisor: 

Phase 2: Application, Negotiation, and Approvals

Phase two converts potential incentives into legally approved incentives. While Phase 1 identifies opportunity, this phase is where incentives are formally pursued and secured.

Application and negotiation

Depending on the jurisdiction and type of incentive, this phase may involve:

• Submitting formal incentive applications
• Negotiating terms with state or local economic development corporations (EDCs)
• Providing detailed project documentation and financial forecasts
• Participating in public notice, hearing, or approval processes

Discretionary incentives, in particular, often require direct negotiation and coordination with multiple government entities. Approval timelines can vary widely—some programs move quickly, while others require multiple layers of review, public meetings, or legislative sign off.

Example: California Competes Tax Credit

California’s Competes Tax Credit is a discretionary, application based incentive that illustrates why Phase 2 is often the most complex part of the incentives process. Businesses must apply during designated windows, compete based on cost benefit metrics, and negotiate performance commitments with state agencies before an award is approved.

By the end of this phase, the business typically receives:

• An executed incentive agreement, contract, or award letter
• Clearly defined performance requirements
• A schedule outlining benefits and compliance obligations

As incentive applications and negotiations progress, questions often arise that can’t be resolved by statute alone. State incentive programs frequently hinge on fact specific determinations—such as how income is classified, how activities are characterized, or whether a project meets statutory thresholds. In some cases, taxpayers seek formal guidance from state revenue departments to confirm eligibility or tax treatment before finalizing incentive applications or agreements.

Florida TAA 25C1 006, issued by the Florida Department of Revenue, analyzed the taxpayer’s specific fact pattern and applied Florida tax law to determine how the activity would be treated for state tax purposes. That determination directly informed whether the project aligned with the statutory requirements tied to the incentive being pursued and how the related tax consequences would be handled once the project moved forward.

This type of guidance plays a critical role in Phase 2 of the credits and incentives process. At this stage, businesses are finalizing applications, negotiating terms, and working with state and local agencies to secure approvals. Having clarity on how the state views the underlying tax treatment can support eligibility positions, reduce uncertainty during negotiations, and help agencies evaluate an application with confidence before approving an incentive agreement.

Importantly, this determination occurred before performance or compliance came into play. Instead, it helped ensure that the incentive was structured and approved based on a clear understanding of how the law applied to the project—avoiding surprises later in the process.

At this point, the incentive is approved—but it has not yet been earned.

Phase 3: Performance, Compliance, and Benefit Realization

The final phase ensures the business meets its commitments, remains eligible for incentives, and actually receives the promised benefits over time. This is often the longest phase and the one that requires the most ongoing attention.

Performance requirements

Most incentive agreements require the business to:

• Complete the promised capital investments
• Create or retain a specified number of jobs
• Meet wage, benefit, or training thresholds
• Maintain operations in the jurisdiction for a defined period

Incentives are typically post performance, meaning benefits are only paid or claimed after these requirements are satisfied.

Compliance and reporting

Compliance does not end once an agreement is signed. Ongoing obligations often include:

• Annual or semi annual compliance reports
• Payroll and employment documentation
• Investment and asset records
• Employment verification and certifications

Records may need to be maintained for many years, particularly for long term incentives such as property tax abatements or withholding retention programs. Failure to comply can result in reduced benefits, clawbacks, or termination of incentive agreements.

Recent reporting and enforcement activity around programs like California Competes and New York’s Excelsior Jobs Program reinforces a key point: incentives are earned through ongoing performance, not awarded outright. Annual reporting, documentation, and compliance tracking are essential to realizing—and retaining—these benefits.

State wants $1.3M in tax credits back from local companies. Could Bitwise be next?—The Business Journal:

Excelsior Jobs Program

What’s Next in Part IV: Real-Life Examples

By examining real world scenarios where projects were ultimately awarded incentives—and are now in the performance and compliance phase—Part IV shows how the process plays out after approval. These examples draw from projects that were evaluated and applied for across multiple states, allowing us to compare how different jurisdictions approached the same opportunity and which benefits were ultimately earned.

Through these case studies, Part IV connects the framework outlined in Part III to actual outcomes, illustrating:

• How incentives influenced location, expansion, or hiring decisions across competing states
• Where timing and negotiation mattered most during the approval process
• What it took to successfully earn incentives and remain in compliance over time

Together, these examples reinforce a central theme of this series: credits and incentives are powerful tools when approached strategically—and most effective when considered early, managed carefully, and supported by a clear understanding of the process.

For businesses considering a new build, expansion, relocation, or hiring initiative, understanding available state and local incentives early can make a meaningful financial difference—and help avoid missed opportunities or costly missteps.

If you’re ready to explore what may be available for your project, complete our State Credits & Incentives Request for Assessment. The form takes approximately five minutes, and Matt Carlson will follow up to discuss potential opportunities tailored to your specific plans.