An Empowerment Zone is a specific geographic area with high unemployment levels and poverty. Staffing agencies within these Zones are incentivized to employ residents and claim the Employment Zone Employment Credit (EZEC).
The tax credit equals 20% of the first $15,000 of wages paid to eligible employees who live and work within the zone. The EZEC program runs through December 31, 2025, to encourage business planning and long-term community development.
Importance of the Empowerment Zone Employment Credit Program
Participation in the EZEC program provides economic and social benefits that positively impact staffing agencies and the community:
- Staffing agencies support the community by hiring residents who live and work within Empowerment Zones.
- The agencies annually receive up to $3,000 per eligible employee to support local employment and economic growth.
- Staffing agency owners should consider the program when determining where to relocate, expand, or maximize business operations.
- Aligning agency business goals and EZEC goals provides tax incentives to stimulate local economic development.
Empowerment Zone Employment Credit Qualifications
Empowerment Zones include distressed urban and rural communities that require employment opportunities and economic growth. These areas include Los Angeles, Chicago, New York City, and parts of Riverside County, California, and Aroostook County, Maine. Specific individuals in these areas are excluded from qualification, such as those employed for less than 90 days, individuals working in certain industries such as gambling facilities or golf courses, and 5% business owners.
Staffing firms must meet specific criteria to qualify for the EZEC:
- Be located within an Empowerment Zone designated by the Departments of Housing and Urban Development (HUD) and Agriculture (USDA).
- Employ individuals who live and work in the Empowerment Zone.
- Have employees who worked at least 90 days during the year the tax credit is claimed. Exceptions include employees who become disabled or are terminated due to misconduct.
Would You Like Help Applying for the Empowerment Zone Employment Credit?
MJA & Associates can help your staffing agency apply for the EZEC. Reach out to learn more today.
