Welcome to the Mississippi Community Renewal Web Site!
In accordance with the American Jobs Creation Act of 2004 (Pub. L.
No. 108-357), the boundary of the West Central Mississippi Rural
Renewal Community designation has been expanded to include two
additional census tracts. The newly expanded census tracts include
an area in the north-western portion of the City of Hollandale,
which is in Washington County, and an area in the center of the
City of Vicksburg between Mission 66 and Indiana Avenue in
Warren County. A major benefit of this expansion is that it creates
the opportunity for qualified businesses in the expanded areas to
claim RC incentives in prior years. Business owners may be eligible
to amend as many as their past 3 tax returns to claim RC tax
incentives.
The RC program, which began January 1, 2002 and continues
through December 31, 2009, allows businesses located within the
40 designated areas to receive valuable tax credits aimed at
providing businesses with immediate tax relief. Mississippi's
designated RC area includes portions of 13 counties and 30
municipalities located throughout the central portion of the state.
The Governor's office, working through the Mississippi Development
Authority, and in conjunction with the Central Mississippi Planning
and Development District, developed and submitted Mississippi's
RC application to HUD. The State's congressional delegation, led by
Senator Trent Lott's office, assisted in gaining the positive
designation
for
Mississippi.
Mississippi's designation provides Economic Developers with an
excellent tool for recruiting new businesses to Central Mississippi.
In addition to new industry, existing businesses, which are the
backbone of Mississippi's economy, will be able to benefit
tremendously from this designation as well.
Designated Zone
Under the Community Renewal Tax Relief Act two types of Renewal Community designations are allowed. One
designation is an urban designation and the other is a rural designation. Mississippi sought a rural designation, which
meant the State’s application had to met the following criteria:
 The building blocks for creating the RC area had to be based on 1990 Census Tracts
 The Census Tracts used to create the RC area had to be contiguous
 Census Tracts, which were part of other Federal Designations such as Empowerment Zones and Enterprise
Communities were ineligible for consideration for an RC designation
 Census Tracts included in the RC area had to have a poverty rate of 20% or greater
 Unemployment within the RC area could not be less than the national average
 The maximum number of people which could be included within the RC could not be more than 200,000
The Central Mississippi Planning and Development District used largely a computer generated and mathematical
process to compile the State’s Census Tracts, which posed the most beneficial combination of the Federal
requirements. Census Tracts, which were ineligible or noncompetitive due to being part of other designated areas and
whose statistical levels showed too much affluence were not included in the application. In all, 50 Census Tracts,
which encompass portions of 13 counties and 30 municipalities, were included in Mississippi’s designated area.
MISSISSIPPI’S RENEWAL COMMUNITY ZONE
Population
199,190
Poverty Rate 41.69%
Counties Municipalities
Attala *
Sallis
Kosciusko *
Leake *
Carthage *
Lena
Walnut Grove
*
These are the only areas
In Central Electric Power
Associations service area
That qualify for renewal
Community status.
Note: * indicates that
only a portion of the
jurisdiction is included
in the designated
area.
Tax Incentives
The Renewal Community program provides a variety of tax incentives to businesses. Some
incentives work well for labor-intensive businesses while some benefit businesses with capital
needs and others benefit small businesses. Under the RC program six main incentives are
available:






Wage Credits
Increased Section 179 Deduction
Commercial Revitalization Deduction
Capital Gains Exclusion
Work Opportunity Tax Credit (WOTC)
Welfare-to-Work Credit (WtW)
WAGE CREDITS
Wage credits allow businesses located in an RC area to deduct up to $1,500 per year for each
year of the designation for each new or existing employee who lives and works in the RC area.
Employers determine their credit amount by calculating 15% of the first $10,000 in wages for
each qualified employee.
EXAMPLE 1: XYZ Basket Company employs 6 people who both live and work in the RC zone.
The XYZ Basket Company pays each employee a yearly salary of $22,000. Under this
illustration the Basket Company is eligible to take an RC wage credit of $9,000.
6
# of RC
Employees
X
$10,000
Max Eligible
Wage Amount
X
15%
Percent
Credit
=
$9,000
Wage Credit
Amount
EXAMPLE 2: ABC Wheel Company employs 6 people who both live and work in the RC zone.
The ABC Wheel Company pays three of the employees a yearly salary of $15,000 and the
remaining three a yearly salary of $8,000. Under this illustration the ABC Wheel Company is
eligible to take an RC Wage Credit of $8,100.
3
X
$10,000
X
15%
=
$4,500
3
X
$8,000
X
15%
=
$3,600
$4,500
+
$3,600
=
$8,100 (Eligible Wage Credit Amount)
Employees who do not qualify for RC Wage Credit are ones who:
 Work less than 90 days for the employer, except those terminated for misconduct or those
that become
disabled
 Relatives and dependents
 Any 5% or greater owner
 Individuals employed at a golf course, country club, massage parlor, hot tub facility, suntan
facility, gambling
facility, business whose principle sale is the sale of alcohol for off-site
consumption or an employee of a farming
facility who has farm assets greater than
$500,000.
INCREASED SECTION 179 DEDUCTION
Under general tax regulations, a business is allowed to expense (take an immediate deduction
on its tax return) the cost of new equipment and machinery acquired each year. Businesses
are allowed to expense up to a fixed amount set each year, and have to depreciate the
remaining costs over the life of the property assigned by tax regulations. However, under the
Increased Section 179 Deduction, RC Businesses are allowed to expense up to an additional
$35,000 a year for qualified equipment and machinery purchased each year of the RC
designation. To take advantage of this incentive businesses must meet the definition of a
Renewal Community Business and must purchase Qualified Renewal Community Property.
EXAMPLE: The XYZ Basket Company purchases new equipment in 2002 for $65,000. If under
general tax regulations, the company could expense only $24,000 a year the Basket Company
would have to depreciate the remaining $41,000 over the life of the equipment. However,
since the XYZ Basket Company is an RC business, it is allowed to immediately deduct $59,000
and has to depreciate only $6,000 over the life of the equipment.
COMMERCIAL REVITALIZATION DEDUCTION
The Commercial Revitalization Deduction allows businesses to increase the amount of
deduction they take for a new or rehabilitated building by reducing the time period over which
the cost must be spread. Each state with an RC is allowed to allocated $12 million (maximum
$10 million per project) per year, in deductions to businesses placed in service after
December 31, 2001 and before January 1, 2010. Once awarded an allocation by the state, the
business is allowed to deduct its allocated amount in either of the following ways:
 Deduct half of the allocated amount for qualified revitalization expenses in the year the
building is placed in service with the remaining qualified amount depreciated over the
standard 39 years, or
 Amortize the full-allocated amount over a 10-year period beginning with the year the
building is placed in service.
In order for a business to receive a portion of the $12 million in deductions, it must complete
a CRD Application and submit it to the Mississippi Development Authority.
Application Guidelines | 2006 CRD Application
CAPITAL GAINS EXCLUSION
The Capital Gains Exclusion allows a holder of an RC asset to exclude in its gross income any
“qualified capital gain” from the sale or exchange of an RC asset. The RC asset must be held
for a minimum of 5 years, and must be acquired between January 1, 2002 and December 31,
2009.
WORK OPPORTUNITY TAX CREDIT (WOTC)
The Work Opportunity Tax Credit is available to businesses that hire employees from groups
with traditionally high unemployment rates or other special employment needs, including
youth who live in the RC. The WOTC can be up to $2,4000, and is available to employers for
the first year of employment only. The Mississippi Employment Security Commission must
certify if an employee is from a targeted group.
WELFARE-TO-WORK TAX CREDIT (WTW)
The Welfare-to-Work Tax Credit applies to newly hired employees who are long-term family
assistance recipients. The credit applies to the first two years of employment and may be as
much as $3,500 the first year and up to $5,000 the second year.
Years Employed
Maximum Rate
Qualified Wages
Maximum Credit
1
35%
$10,000
$3,500
2
50%
$10,000
$5,000