tiered credits
Definition
Tiered credits are tax breaks or discounts that increase in value as you hit certain thresholds, like revenue levels, employee counts, or purchase amounts. The government or a vendor sets up these steps so that the more you qualify, the bigger the reward you receive. Think of it like a loyalty program where each level unlocks better savings.
Example
A state might offer a 5% tax credit if you hire 5 new employees, a 10% credit if you hire 10, and a 15% credit if you hire 20 or more, rewarding you more generously as your commitment grows. Your accountant would calculate which tier your business falls into when filing your taxes.
Watch Out
Make sure you understand exactly what gets measured to determine your tier, because falling just short of a threshold could mean a significantly smaller credit than you were counting on.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.