What are Tax Credits?

Tax credits are a type of tax expenditure. Tax expenditures are exemptions, deductions, credits, preferential or lesser rates, or other mechanisms that lower the amount of tax revenue that would otherwise be collected. Tax expenditures are similar to direct appropriations in that they provide a direct benefit to certain entities at a cost to the state; in this case the cost is reduced tax revenue. Unlike appropriations, tax expenditures are not reviewed and adjusted annually by the legislature. Combined, tax expenditures cost the state more than $5 billion annually.

OFA - Tax Expenditure Report

This report identified and describes state-level tax expenditures and estimates the cost of each tax in terms of lost state revenue.

DECD - Triennial Assessment

This report assess the economic and fiscal impact of the state’s tax credit and abatement programs. It evaluates tax credit and abatement programs based upon estimated impacts on job creation and retention, the state economy and state revenues.