A growing number of states are recognizing the importance of evaluating their economic development tax incentives. For example, lawmakers in Indiana, Mississippi, and Rhode Island have recently enacted legislation to ensure their states take three key steps to regularly review and analyze these programs.

1.  Develop a schedule: When states evaluate all of their tax incentives regularly, they areCalendar Icon able toidentify which incentives are effective and which are not and use this information to improve the programs’ results. States often review their incentives on a rotating basis over several years. Determining how frequently each incentive will be evaluated requires finding a balance between the need for up-to-date information and the time required to produce rigorous, detailed studies. Some states study incentives with similar goals in the same year to help facilitate comparisons between the programs.