Economic Development Tax Incentives

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Why Tax Incentives Matter

States spend billions of dollars a year on tax credits, deductions and exemptions meant to encourage businesses to create or retain jobs and make investments. When designed and managed well, tax incentives can strengthen a state’s economy. But Pew’s research reveals that lawmakers often approve or continue incentives without knowing their potential cost or whether they are working. State leaders need better information to avoid unexpected budget challenges, identify effective incentives, and reform or end programs that are not meeting expectations. 

How We Conduct Our Work

We study the policies and practices states have used to generate much-needed answers about the budget risks and economic returns of tax incentives. Based on this research, we work with leaders in selected states to advance policies that:

  • Protect budgets from unexpected tax incentive costs;

  • Evaluate all tax incentives on a regular schedule; and

  • Inform lawmakers’ policy choices with evidence from evaluations

Our Work

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  • State Fiscal Policy Toolkit

    The Pew Charitable Trusts researches the fiscal challenges faced by states and examines the policy options available to address them. The resources listed below, which include comprehensive 50-state assessments, illuminate common concerns and creative solutions to help policymakers understand the issues and learn from one another’s experiences. Read More

  • Economic Development Tax Incentives: What Are They and Why Do They Matter?

    Indiana recently announced it would provide United Technologies Corp. with $7 million in tax incentives over 10 years to encourage the company’s Carrier Corp. unit to keep about 1,000 jobs in the state. This Q&A with Josh Goodman of The Pew Charitable Trusts’ states’ fiscal health team explains what economic development tax incentives are, why they matter, and how... Read More

  • Colorado: A Governing Success Story

    Today, leaders in Colorado are doing just that to ensure that state funds are expended on programs that bring the greatest return on investment and serve the public interest. Under the leadership of Governor John Hickenlooper, legislators have worked to craft bipartisan legislation, review budgets, improve services, and build public confidence in the performance of government. In particular, the... Read More

Better Incentive Information

Three strategies for states to use economic development data effectively

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Reducing Budget Risks

Using data, design to make state tax incentives more predictable

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Economic Incentives: Measuring Results

Economic Development Tax Incentives

Media Contact

Catherine An

Officer, Communications

202.552.2088