Article 3J Tax Credits offer several types of tax credits to eligible taxpayers that undertake qualifying initiatives. These credits may be used to offset up to 50% of the taxpayer’s state income and/or franchise tax liability, and unused credits may be carried forward for up to five years.
Note: Article 3J Tax Credits should not be confused with William S. Lee Tax Credits. Article 3J is not a revision of the Lee Act; it replaces it. In general, William S. Lee Credits are repealed for business activities that occur on or after January 1, 2007 and Article 3J Credits take effect for taxable years beginning on or after January 1, 2007.
Article 3J offers credits for:
- Creating jobs – Companies who meet a minimum threshold of new fulltime jobs created during the taxable year may claim a credit.
- Investing in business property – Companies can claim a credit based on a percentage of the cost of capitalized tangible personal property that is placed in service during the taxable year.
- Investment in real property – Companies located in a Tier One County that invest at least $10 million in real property within a three-year period and create at least 200 new jobs within two years are allowed a credit equal to 30% of the eligible investment.
Article 3J Tax Credits Program Overview
County Tier Designations
The Department of Commerce annually ranks the state’s 100 counties based on economic well-being and assigns each a tier designation. The 41 most distressed counties are designated as Tier 1, the next 39 are Tier 2 and the 20 least distressed are Tier 3. This tier system is incorporated into various state programs, including Article 3J Credits.
To learn if your business is eligible for Article 3J Tax Credits, review the statutes in the documents above and then visit the 2008 County Tier Designations area of our site to find your Tier designation. No application is required to claim Article 3J Credits.
Urban Progress Zones (UPZ) and Agrarian Growth Zones (AGZ)
Municipalities with a population of at least 10,000 have the ability to define qualifying areas of poverty as Urban Progress Zones. Counties that do not have a municipality with a population of at least 10,000, have the ability to define qualifying areas of poverty as Agrarian Growth Zones. Projects located within these zones received enhanced Article 3J Credits.
For more information please visit the Urban Progress Zones (UPZ) and Agrarian Growth Zones (AGZ) area of our website.
If after reviewing these resources, you are uncertain about your eligibility, contact the N.C. Department of Revenue Corporate Tax Division at 919-733-8510.