Empowerment Zones

The Empowerment Zone tax incentives and the Renewal Community tax incentives are worth approximately $11 billion to eligible businesses of all sizes in Empowerment Zones and Renewal Communities. These incentives encourage businesses to open, expand, and to hire local residents. The incentives include employment credits, a 0% tax on capital gains, increased tax deductions on equipment, accelerated real property depreciation, and other incentives.

In the Empowerment Zones and Renewal Communities, the most widely used Community Renewal tax incentive is the employment credit, which provides tax benefits to businesses that employ residents from the designated areas.

The EZ/RC tax incentives were provided as a tool for the designees to stimulate job creation and retention and business investment in buildings and equipment.  The interagency partnership between HUD and IRS is essential because HUD has the economic development expertise and IRS has the tax expertise.  This resulted in securing data provided by IRS on claim trends from 1997 through 2008.

Tens of thousands of business owners and tax preparers visit HUD’s Address Locator each month to verify that businesses and the residences of employees are located in these areas.

HUD re-energized the Community Renewal initiative in December 2001 by designating 8 new urban Empowerment Zones and 40 urban and rural Renewal Communities. Together with 22 Empowerment Zones that HUD designated in competitions in 1994 and 1999, these communities share an $11 billion tax-incentive package that encourages entrepreneurs to open new businesses, expand existing ones, and hire local residents.

The leaders of each Empowerment Zone and Renewal Community work closely also with government, business, and local community representatives to implement strategic plans to improve social and economic conditions throughout the designated areas.