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State Legislative Best Practices in Support of Bioscience Industry Development
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Supportive Business Climate Incentives
Facilitating efforts by companies to leverage existing resources has proven to be a powerful tool for retention and attraction efforts by state policymakers over the past ten years. Lawmakers have become aware of the high cost and the length of time involved in the development of new bioscience products. As a result, they are tailoring legislation to adapt to the financial realities of these new technologies.
Legislators also understand the importance of a stable and supportive business climate for small and emerging companies. From capital gains exemptions and net operating loss considerations to tax exemptions on equipment and investment credits for individuals, states are increasingly aware of the unique challenges facing bioscience companies.
New Jersey: High Tech Job Creation and Retention Act
Tradable R&D and NOL Credits (17 KB PDF)
High Technology Investment Tax Credit (19 KB PDF)
15-year Carryforward for State Net Operating Loss Deduction (12 KB PDF)
15-year Carryforward for State R&D Tax Credit (13 KB PDF)
New Jersey in 1997 passed the "High-Tech Job Retention" legislation, an economic development bill designed to incentivize investment in small high-tech companies with fewer than 225 employees. The law, a four-bill package included an investment tax credit; a transferable research and development tax credit; extension of net operating losses carryforwards from 7 years to 15 years; and research and development tax credits.
Kansas Economic Growth Act
PDF of Legislative Language (231 KB)
Kansas recognized the significant opportunity in ensuring the growth of bioscience-related jobs and creating economic prosperity by introducing The Kansas Economic Growth Act (KEGA). KEGA is comprised of two sections, the Kansas Entrepreneurship Initiative and the Kansas Biosciences Initiative. Together they combine for a $500 million investment over the next 10-12 years.
Ohio: Third Frontier Project
PDF of Legislative Language (102 KB)
Ohio's Third Frontier Project is a ten-year, $1.1 billion initiative and is the state's largest commitment to expanding high-tech research capabilities and promoting innovation and company formation. Through its core programs and related initiatives the Third Frontier program is designed to build research capacity, support early stage capital investment, and finance advanced manufacturing technologies to help existing industries become more productive.
Colorado's Sales Tax Exemption for R&D Equipment
PDF of Legislative Language (23 KB)
The Colorado State Legislature enacted legislation in 2006 establishing a refund for qualified taxpayers of all state sales and use tax paid during a given calendar year for the purchase, storage, use, or consumption of tangible personal property to be used in Colorado directly and predominately in research and development of biotechnology.
Hawaii: High Technology Business Investment Tax Credit
PDF of Legislative Language (149 KB)
Commonly known as "Act 221" or "Act 215", the High Technology Business Investment Tax Credit was originally established by Act 221 in 2001 and amended by Act 215 in 2004 as a means to encourage investment in high technology businesses. The law contains a 100% investment tax credit (capped at $2 million annually) for investing in a Qualified High Technology Business (QHTB). A QHTB is defined as a business employing or owning capital or property or maintaining an office in Hawaii, provided that: more that 50% of the total business activities are “qualified research” and that the business conducts more than 75% of its qualified research in Hawaii, or, more than 75% of its gross income is derived from qualified research and that this income is received from products sold from, manufactured in, or produced in Hawaii, and services performed in Hawaii. “Qualified research” includes any research on development and design of computer software; biotechnology; performing arts products; sensor and optic technologies; ocean sciences; astronomy; and non-fossil fuel energy-related technology. In addition Acts 221/215 provide for a 20% refundable tax credit for qualified R&D, a technology infrastructure renovation tax credit, and a capital gains and dividends exemption.
DISCLAIMER: The examples cited in this document are only a small fraction of policies state governments have put in place to grow the bioscience industry. It is not intended to be exclusive of other policies to develop technology-based industries.
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