Modernization of Wisconsin’s BDTC: A new driver for economic development

Curtis A. Edwards

Guest Columnist

June 17, 2024

Wisconsin’s business landscape is set for a significant transformation following the enactment of 2023 Wisconsin Act 143, a legislative milestone aimed at modernizing the state’s Business Development Tax Credit (BDTC) program.

Signed into law by Gov. Tony Evers March 21, 2024, this new legislation promises to rejuvenate economic growth, address workforce challenges and position Wisconsin as a more attractive destination for business investment.

Background and legislative changes

Wisconsin’s BDTC – aimed at providing businesses with an incentive to locate, expand and invest in Wisconsin – provides businesses with the opportunity to earn refundable tax credits that can be used to offset the cost of business development projects.

However, under the previous BDTC framework, tax credits were heavily tied to job creation metrics.

This posed considerable challenges for businesses struggling with persistent workforce shortages, particularly after the COVID-19 pandemic.

As a result, many businesses found it increasingly difficult to meet job creation quotas, especially amid a growing shift toward automation.

Recognizing these challenges, the Wisconsin Economic Development Corporation (WEDC) – the organization responsible for awarding and administering business development tax credits – has introduced several key revisions under Act 143.

The new legislation now emphasizes capital investment as the primary driver of eligibility for tax credits, rather than net employment increases.

Businesses can now qualify for the BDTC by making significant capital investments in the state and retaining existing jobs, without the stringent requirement of year-over-year employment growth.

Key provisions of Act 143

Capital investment focus: The new law lowers the capital investment threshold for property investment tax credits to $250,000.

Previously, projects needed a total investment of at least $1 million, or $10,000 per eligible employee.

This reduction makes the BDTC program more accessible to a broader range of businesses, encouraging more substantial and varied investments across the state.

Workforce housing and childcare: Acknowledging the critical role of housing and childcare in workforce retention, the legislation introduces additional tax credits for investments in these areas.

Businesses can now receive a 15% credit for investments in workforce housing and employee childcare programs.

This initiative aims to alleviate the financial burdens on workers and attract new residents by increasing the availability of suitable housing and support systems for workers with young children.

Streamlined approval process: To expedite business decision-making and implementation of investment plans, the WEDC is mandated to approve or deny BDTC applications within 90 days.

This streamlined process provides businesses with greater certainty and reduces bureaucratic delays, creating a more attractive business environment to foster economic growth.

Impact on Wisconsin’s Business Environment

The modernization of the BDTC program marks a pivotal shift in Wisconsin’s economic development strategy.

By decoupling tax credits from strict job creation targets and focusing on capital expenditures, the state acknowledges the evolving needs of contemporary businesses.

This change is particularly beneficial for existing businesses looking to upgrade machinery, make renovations or invest in automation without the burden of having to increase employment numbers.

Though employers who create additional jobs can still qualify for the BDTC, the changes to the BDTC acknowledge retention is equally important, if not more so, in the current economic environment.

Moreover, by incentivizing investments in workforce housing and childcare, Wisconsin is creating a more attractive and supportive environment for workers.

This holistic approach addresses immediate business needs and contributes to long-term community development and workforce stability.

Segue to a prosperous future

The passage of Act 143 represents a proactive and well-thought-out approach to economic development in Wisconsin.

The revamped BDTC program, with its emphasis on capital investment and strategic support for workforce housing and childcare, positions the state to better attract and retain the businesses and workers necessary for continued economic growth.

As the state navigates the complexities of the modern economy, these strategic incentives are poised to drive innovation, investment and prosperity in Wisconsin for years to come.