Incentives

When you locate your business at Phoenix-Mesa Gateway Airport, you enjoy a number of great incentives, from tax exemptions associated with Gateway’s Military Reuse Zone designation to tax credits for your employees.



Military Reuse Zone Foreign Trade Zone Opportunity


MILITARY REUSE ZONE

Military Reuse Zone


Established in 1992 by the state legislature to lessen the impact of military base closures, Military Reuse Zones (MRZ) provide tax incentives to aviation and aerospace companies within their boundaries. Gateway is one of two MRZs in Arizona. As such, it can offer businesses substantial benefits:

  • Transaction Privilege Tax Exemption – Specified types of construction at an MRZ are exempt from the transaction privilege tax.
  • Property Reclassification – Both real and personal property can be reclassified from Class 1 (18 percent assessment ratio) to Class 6 (5 percent assessment ratio), which may result in property tax savings of up to 72.2 percent over a five-year period.

1 of 2 Military Reuse Zones in Arizona
Real & personal property can be reclassified from Class 1 to Class 6


FOREIGN TRADE ZONE #221

Foreign Trade Zone


Gateway is a Foreign Trade Zone (FTZ), a secured area under U.S. Customs’ supervision where merchandise is considered outside the United States for commerce purposes. As a business at Gateway, you’ll enjoy the many benefits of its status as FTZ #221, including:

  • Duty Exemption – There are no duties or quota charges on re-exports.
  • Duty Deferral – Duties and federal excise tax is deferred on imports.
  • Inverted Tariff – The duty rates for imported components is higher than the duty rates for the finished product entering the United States, allowing you to sell your finished product for less.
  • Property Tax Benefits – Arizona provides a lower assessment ratio for activated FTZs like Gateway. As a result, property taxes are reclassified from Class 1 to Class 6, resulting in a potential savings of approximately 72.2 percent.

Duty exemption and defferal
Inverted tariffs
72% property tax savings


OPPORTUNITY ZONE

Opportunity Zone


Gateway is also an Opportunity Zone. Designed to spur economic development, Opportunity Zones allow investors to receive reductions on their capital gains taxes by reinvesting their capital gains in zone funds. Reductions are based on the length of investment:

Investments held 10 years: Reinvesting capital gains reduces the taxable amount by 15 percent while no tax is owed on appreciation. For example, if you reinvest $100 of capital gains into an Opportunity Zone fund for 10 years, the taxable amount is reduced to $85 ($100 minus $15) and not due until the end of the investment period. At that time, you would owe $20 tax on the original capital gains (23.8 percent of $85). No tax would be owed on the Opportunity Zone investment’s capital gain. Assuming a 7 percent annual growth rate, the after-tax value on the original $100 investment would be $176 be 2028.

Investments held seven years: Reinvesting capital gains also reduces the taxable amount by 15 percent when investments are held for seven years. If you reinvest $100 of capital gains into an Opportunity Zone fund and sell in 2025, the taxable amount is reduced to $85 ($100 minus $15). Again, you would owe $20 on the original capital gains (23.8 percent of $85). Assuming a 7 percent annual growth rate, you would owe $15 in tax (23.8 percent of $61) on the Opportunity Zone investment’s capital gain.

Investments held five years: Reinvesting capital gains for five years reduces the taxable by 10 percent. In this scenario, if you invest reinvest $100 of capital gains into an Opportunity Zone fund and sell in 2023, the taxable amount is reduced to $90 ($100 minus $10). You would owe $21 in tax on the original capital gains (23.8 percent of $90). Assuming a 7 percent annual growth rate, you would owe $10 in tax (23.8 percent of $40) on the Opportunity Zone investment’s capital gain.

Investments held for five years receive 10% reduction
Investments held 7 or 10 years receive 15% reduction


By leasing at Gateway, you’ll be exempt from paying any real property taxes. The landowner—not the leasing entity—pays the real property taxes.
No real property tax!

Additional Depreciation

Businesses in Arizona benefit from an enhanced additional depreciation allowance that substantially reduces the tax liability on most personal property devoted to commercial, industrial, and agricultural purposes in the first five years of its use. This can have a significant impact on your taxes (and bottom line).

Additional depreciation



In the first year alone, additional depreciation reduces the personal property’s full cash value for tax purposes by 75 percent. The full cash value is then reduced to 59 percent in the second year of use, 43 percent in the third year, 27 percent in the fourth year, and 11 percent in the fifth year. The impact of additional depreciation is significant.

Reduced liability

For example, after one year of use, a qualified piece of industrial equipment with a 10-year lifespan purchased for $1,000,000 would have a full cash value of $910,000, an assessed value of $147,465 after applying the personal property tax exemption, and an estimated tax liability of $17,327 (assuming a statewide average property tax rate of 11.75 percent). With additional depreciation, the property’s full cash value would be reduced by 75 percent to $228,000, its assessed value would be $17,885 after applying the personal property tax exemption, and its estimated tax liability would be $2,101. That’s a first year estimated tax savings of $15,226 or 75 percent! Using the same calculations, the total property tax savings from additional depreciation over five years would be $36,367 or 56 percent!

Quality Jobs Tax Credit

The Quality Jobs Tax Credit offers up to $9,000 of Arizona income or premium tax credits ($3,000 per year) spread over a three-year period for each net new quality job created.

Since the program is designed to encourage continuous employment, the tax credit is divided as follows:

Quality Jobs Tax Credit offers up to $9,000 over three years
FIRST YEAR

$3,000 per net new qualified employment position created during the taxable year or partial year of employment.
SECOND YEAR

$3,000 per qualified employment position, employed for the second full taxable year of continuous employment.
THIRD YEAR

$3,000 per qualified employment position, employed for the third full taxable year of continuous employment.

 

To learn more about the benefits of locating your business at Gateway, call us now at 480-988-7662 or send an email to jjefferson@gatewayairport.com