Tax free real estate - Penn's Northeast Home Page

Thanks to an initiative started in 1998, local counties, municipalities and school districts were allowed to designate certain properties within their jurisdictions as special tax-free zones. All three taxing bodies had to agree to total local tax forgiveness for a property to receive either KOZ or KOEZ status.

To search for KOZ or KOEZ properties now, click here.

The good news is that there are many excellent sites in the Penn's Northeast region that have received either KOZ or KOEZ status. So how do you qualify and how much money can you actually expect to save?

Eligibility

To be eligible you must have a project that dramatically impacts the local economy and/or its workforce. If a Pennsylvania-based company is relocating an operation from a non-KOZ/KOEZ into one of the zones, then it must:

either increase its full-time employment by at least 20% in the first full year of operation
or make a capital investment in the zone equal to at least 10% of the gross revenues of the business in the preceeding calendar or fiscal year.

A business relocating from outside Pennsylvania into a KOZ/KOEZ is not subject to the relocation provisions. Such a business must simply own or lease real property in a KOZ/KOEZ from which it actively conducts a trade, profession, or business, and obtain annual certification from the Pennsylvania Department of Community and Economic Development.

Tax Exemptions

Some of the local and state taxes from which an eligible business that moves into a KOZ/KOEZ will be exempt include:

Local real estate taxes
Local business privilege or mercantile taxes (if any)
Pennsylvania's Corporate Net Income Tax
Pennsylvania's Capital Stock & Franchise Tax
State Sales Tax on the purchase of taxable property or services (excluding motor vehicles) that are used and consumed by the business within the zone.
State Sales Tax on telephone and electric service used by a business in the zone
State Sales Tax on "building machinery and equipment" purchased by a contractor in conjunction with a construction contract
The Bank and Trust Company Shares Tax or the Mutual Thrift Institutions Tax, subject to certain limitations, for liabilities attributable to business activity conducted within a zone. Only banks, trust companies and mutual thrift institutions are subject to these taxes.
The Insurance Premiums Tax - an insurance company that is a qualified business may take a Job Tax Credit, subject to certain limitations, against this tax liability attributable to business activity conducted within a zone.
Personal Income Tax on a qualified sole proprietorship, partnership, or PA S-Corporation - income earned by a qualified business inside a zone is not subject to this tax when passed through to the resident/nonresident shareholder, partner, member, etc…

Even if you don't locate in a KOZ/KOEZ, we have plenty of incentives to make your move into Penn's Northeast as affordable and successful as possible. Just visit our Incentives Page on this web site for a quick preview.