TAX CREDITS

California Competes Tax Credit:  This discretionary program provides corporate income tax credits to businesses that create new jobs. The actual amount of the tax credit award is based on capital investment, job creation, and employee compensation. Program restrictions limit the amount of tax credits claimed by any single business to no more than 20% of all credits awarded during a fiscal year.  Tax credits are non-transferable and non-refundable; however unused credits can be carried forward for up to 6 years. 

New Employment Hiring Tax Credit (NEC):  This program is available to businesses that establish operations in the top 25% of California census tracts with the highest rates of poverty and unemployment. Businesses that locate in former Enterprise Zones and Local Agency Military Base Recovery Areas (LAMBRA), regardless of whether these areas meet the threshold for high poverty and unemployment rates, are also eligible to receive tax credits.   The actual credit is equal to 35% of qualified employee wages each year for a period of 5 years with a maximum credit of $56,000 per job. To receive the tax credit, businesses must hire employees that meet the following criteria:

  • Unemployed for six (6) months before hire
  • Veterans within one-year of separation from U.S. Air Force
  • Earned Income Tax Credit recipients
  • Convicted felons
  • Recipients of CalWorks and/or other welfare assistance programs

Only jobs that offer wages of $13.50/hr to $31.50/hr can qualify for the credit. Tax Credits are non-transferable and non-refundable; however unused credits can be carried forward for up to 5 years.

Research & Development Tax Credit: Provides a tax credit of 15% against corporate income or franchise tax liability for qualified in-house research expenses and a 24% credit for basic research payments to outside organizations. An alternative incremental rate may be selected, as well. Unused credits can be carried forward until none remain, and may also be assigned to an affiliated corporation.                  

TAX EXEMPTIONS

Partial Sales & Use Tax Exemption for Manufacturing and R&D: Manufacturers and companies engaged in R&D related to the physical, engineering, and life sciences are eligible for a partial reduction in state sales and use tax. The partial exemption only applies to the state sales tax rate – businesses are still subject to local sales tax. 

LOW- INTEREST FINANCING

Industrial Development Bonds (IDB): Competitive financing option that provides tax-exempt securities of up to $10 million for the acquisition, construction, rehabilitation and equipping of manufacturing and processing facilities for private companies. At least 95% of bond proceeds must be spent on qualifying costs such as land, building, and equipment.

 

Last updated: April 2016


 
BIGGINS LACY SHAPIRO & COMPANY
PRINCETON
47 Hulfish Street, Suite 320
Princeton, NJ 08542
(609) 924-9775
NEW YORK
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