An example of a corporate tax incentive is a government giving a major company tax breaks in exchange for them building an office or plant in their city. The central government planners ignored the incentives that stem from people’s attention to their self interest. Term incentive Definition: A cost or benefit that motivates a decision or action by consumers, businesses, or other participants in the economy.Some incentives are explicitly created by government policies to achieve a desired end or they can just be part of the wacky world we call economics. The economic concept of incentives is a powerful tool for explaining human behavior. People who find politics fun and want to meet others like this are drawn to these incentives. They can be prepared as individual plans, group plans and organi­zational plans. ‘The government also gave generous tax incentives for investment.’ ‘In addition to federal tax credits, California offered an additional state tax incentive for wind energy production.’ ‘To improve its on-time arrival rates, further financial incentives were provided monthly.’ The purpose of incentive contracts is to tie a financial reward to the completion of an objective. Definition: 1. Incentives are rewards or penalties for behavior. See more. Incentive definition, something that incites or tends to incite to action or greater effort, as a reward offered for increased productivity. Financial Incentives. Incentive Contract Facts. Types of government support and incentives Land acquisition. Definition The social rewards that lead people to join local or state political organizations. The federal tax incentives, or credits, for qualifying renewable energy projects or equipment include the Renewable Electricity Production Tax Credit (PTC), the Investment Tax Credit (ITC), the Residential Energy Credit, and the Modified Accelerated Cost-Recovery System (MACRS). The U.S. federal government offers a range of services and programs for companies that operate in the United States – from general workforce development and energy efficiency grants to industry-specific incentives. Contract incentives exist to encourage the completion of a contract. Any delay or problems in land acquisition could be a major source of risk to investors, particularly for road and rail projects and other projects that require large tracts of land. Incentives can be classified as direct and indirect compensation. According to Milton L. Rock, incentives are defined as ‘variable rewards granted according to variations in the achievement of specific results’. ... be enhanced by using a contract that effectively motivates a contractor toward exceptional performance and provides the government with the flexibility to evaluate both actual performance and the conditions under which it was achieved. incentives The government must value the above satisfactory performance to set aside resources to incentive the improved outcomes Cost to pursue incentive The incentive must be smaller than the value to the government to make it worth its while. Incentive Contract Law and Legal Definition. Value of improved outcomes Incentive SIZE OF INCENTIVE 16 2. This type of tax incentive stimulates the economy in that area by empowering the company to provide jobs, as well as make goods or services available for purchase. A financial reward is generally used as a contract incentive, although other types of rewards can be used. 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