Incentives Update: General Trends

As we wrap up the C2ER State Business Incentives update, we’re looking at nationwide trends. What kinds of programs are states launching? What challenges are they trying to solve? Where do we see the most activity? This blog explores how new and evolving incentives are shaping state economic development strategies.

Program Numbers and Focus

Although the number of incentive programs continues to increase, new incentive program creation has steadily declined over time. As shown in Figure 1, the number of new programs peaked in 2011 and has followed a downward trend since then. While 2025 shows a spike in new programs, the broader trend suggests that states have generally reduced their rollout of new incentive programs. Generally, in response to recessions, states appear to introduce more new incentive programs, For example, in 2020, several states introduced programs to reduce business disruption risks. Such as Maryland’s Manufacturing Disruption Mitigation Assistance Program (MDMAP) and Montana’s Agriculture Adaptability Program.

Several new programs in 2024 and 2025 are focused on boosting childcare resources. For example, in 2024, Nebraska introduced the School Readiness Tax Credit and Child Care Nonrefundable Tax Credit. This offers relief to operators and providers of early childcare and education programs. Utah and Alabama followed suit in 2025, rolling out the Child Care Business Tax Credit and Childcare Facility Tax Credit, respectively. Both are designed to encourage employer-provided childcare and improve childcare availability.

Moving forward, trends suggest that we may see states increase the number of incentives added annually. Specifically, states may respond to reshoring efforts by encouraging increases in domestic manufacturing.  In doing so, states may also launch export support and workforce training, upskilling, and recruitment incentives to supplement manufacturing growth, production expansion, and increased demand for labor.

Figure 1.

Program Types

Over half of the active incentive programs in the database are categorized as either tax credit or exemption programs, grant programs, or loan programs. Grants, tax credits/exemptions, and loans are common state business incentives because they’re relatively easy to implement and administer through existing systems. Ensuring high performance from recipient companies, these types of programs also offer more straightforward ways to measure economic impact. Other potential incentives, like equity investment or insurance, are much less popular options (Figure 2).

Figure 2.

Incentive programs continued to be multifaceted and often address multiple business needs. However, as expected, many focus on enhancing the return on investment (ROI) for business expansion, improving access to capital, and reducing tax or regulatory burdens. Other notable business needs include infrastructure or facility development, product development, and workforce development (Figure 3).

Figure 3.

States continue to typically use statewide programs for impacting local and regional economies. The small number of regionally focused incentives are usually in designated development zones, underdeveloped, or rural areas. This trend is consistent with previous updates, showing most programs offer geographically broad economic support.

Figure 4.

Macroeconomic fiscal and monetary tightening typically slows business expansion and economic activity, which may prompt states to introduce more incentive programs to boost demand. If previous periods of economic hardship are an indication, the number of new programs may spike to mitigate business belt-tightening.

The push to bolster domestic manufacturing may also encourage incentive program growth to retain and grow existing businesses, attract new businesses, encourage exports, and prepare the workforce to meet changing labor needs. In addition to manufacturing, we may also expect states to prioritize workforce initiatives and programs like childcare or housing to support a robust workforce. These efforts will be essential in fostering long-term economic resilience, helping states adapt to evolving challenges and secure sustainable growth. To learn more about business incentives, please check out C2ER’s State Business Incentive Database.