What is the Recycling Market Development Zone Act?
In 1996, the Utah Legislature created the Utah Recycling Market Development Zone (RMDZ) Act, which provides environmental and economic benefits to Utah businesses and citizens (Title 19 Utah Code, Chapter 13). This legislation encourages individuals and businesses to recycle by offering tax credits for the machinery, wages, utilities, and spaces used to produce goods from recycled materials, or to individuals and businesses that reduce or reuse materials that would otherwise become waste. Additionally, according to the legislation, commercial composting is an eligible operation.
As more products are recycled and used to manufacture new products, waste is reduced in the landfills and the economy is stimulated as companies are established, expand, and create additional jobs.
Check with your local city or county to verify that you or your business is located in a designated RMDZ and determine if you are qualified to receive the following tax credits:
- 4.95% Utah non-refundable tax credit** on the purchase price of machinery and equipment used directly in commercial composting; or manufacturing facilities or plant units that manufacture, process, compound, or produce recycled items of tangible personal property for sale, or reduce or reuse post-consumer waste material; and
- 20% Utah state income tax credit (up to $2,000) on eligible operating expenses, including payments made to third parties for rent, wages, supplies, tools, test inventory, and utilities, for establishing and operating recycling or composting technology in Utah.
In addition to tax credits, the RMDZ legislation also entitles businesses to select services offered by the municipality sponsoring the Recycling Market Development Zone.
Applying for Tax Credits
Qualifying purchases and expenditures must be certified by the Department of Environmental Quality. The evaluation is conducted by a representative within the Division of Waste Management and Radiation Control.
To claim the credit, complete form TC-40R, Recycling Market Development Zones Tax Credit, the Recycling Market Development Zone Tax Credit Worksheet, and the Recycling Market Development Zone Tax Credit Worksheet Certification. Submit the forms according to the instructions on the Tax Credit Worksheet. Once the forms have been reviewed you will receive a verification signature*** on the form TC-40R. Do not submit this form with your return. Keep it with your tax records
You may then claim the credit calculated by the Recycling Market Development Zone Tax Credit Worksheet on TC-40R by entering in on Utah TC-40A, Part 4, using code 10.
*You cannot claim this non-refundable credit or carry it forward into a year you have claimed the non-refundable Enterprise Zone Tax Credit or the refundable Targeted Business Income Tax Credit.
**The total credit claimed may not exceed 40% of the Utah income tax liability. Any tax credit for the purchase of machinery and equipment (the 5% credit explained above) that is in excess of tax due will not be refunded but may be carried forward to offset tax for up to three years.
***The division reserves the right to verify and investigate all claims.
As demand grows for recycled products, new and expanding recycling-based manufacturers are looking for good places to do business. Your community could benefit from the high-quality jobs and added tax base these businesses can offer. Utah communities with Recycling Market Development Zones will improve their ability to assist their local businesses and attract new ones in the rapidly growing recycling industry.
All Utah cities/municipalities and counties are eligible to submit applications to designate areas as a Recycling Market Development Zone.
To receive the Recycling Market Development Zone designation, communities and counties must offer businesses within the zone some incentives which could include but are not limited to:
- financing, such as loans or grants
- expedited permitting assistance
- infrastructure assistance
- competitive utility rates
- reduced business license fees
- zoning assistance
Applications for zone designation must include:
- identification of local contributions
- summary of local recycling program(s)
- support from local elected officials
- recycling market development plan
To apply for RMDZ designation, use the RMDZ Application for Counties and Municipalities, and submit documentation to the Division of Waste Management and Radiation Control as described on the application form.
- Recycling Market Development Zone Tax Credit Worksheet
- Recycling Market Development Zone Tax Credit Worksheet Certification
- RMDZ Application for Counties and Municipalities Form
- TC-40R, Recycling Market Development Zones Tax Credit Form