Empowerment Zone Wage Tax Credit

The Empowerment Zone Wage Tax Credit is for businesses in Empowerment Zones that hire local residents.

Empowerment Zones (EZs) were created by the U.S. Department of Housing and Urban Development (HUD). They encourage business growth and economic development in low-income communities. New York City has two Empowerment Zones, one located in Upper Manhattan and one in the South Bronx.

Employers can claim a federal tax credit of up to $3,000 for each full- or part-time employee who is an Empowerment Zone resident. The credit is based on 20% of the first $15,000 in wages earned by the qualifying employee. The credit can be claimed if the business pays qualified zone wages to a qualified zone employee. A qualified zone employee is any employee who meets both the following tests:

1. The employee performs substantially all of his or her services for you within an empowerment zone and in your trade or business; and
2. While performing those services, the employee’s main home is within that EZ.

Employers must verify their business location and employees address as being inside an EZ.