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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  • Questions for Lawmakers to Ask When Designing New Tax Incentives

    Economic development incentives are one of the primary tools states use to try to strengthen their economies. Every state employs a mix of tax incentives, grants, and loans in an effort to create jobs, encourage business expansions, and achieve other goals. When lawmakers consider enacting, renewing, or extending one of these programs, asking three questions can help ensure the best outcome for... Read More

  • Pew: States Make Progress in Evaluating Tax Incentives

    WASHINGTON--More than half of U.S. states have processes to regularly evaluate their economic development tax incentives, according to a new report from The Pew Charitable Trusts. How States are Improving Tax Incentives for Jobs and Growth: A national assessment of evaluation practices examines the progress that the 50 states and the District of Columbia have made to produce high-quality... Read More

  • State Tax Incentive Evaluation Ratings

    Tax incentives—including credits, exemptions, and deductions—are one of the primary tools that states use to try to create jobs, attract new businesses, and strengthen their economies. Incentives are also major budget commitments, collectively costing states billions of dollars a year. Given this importance, policymakers across the country increasingly are demanding high-quality information on... Read More

Media Contact

Catherine An

Officer, Communications


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