California Governor Eliminates the Enterprise Zone Tax Credit Program and Implements Three New Tax Credit Programs

Edward Lieber, CPA

In July 2013, California Governor Edmund G. Brown Jr. signed a 2013 Economic Development initiative that eliminated the Enterprise Zone Tax Credit but implemented three new tax credit programs.

The three new tax credits are:

To qualify for the New Employment Credit your company must be located in a qualified area, your company must be in a qualified industry, and your newly hired employees must be full time, making over $13.50/hour, and must increase total net employees for the year for your business statewide. The employee qualified if they meet four factors related to employment history, status as a veteran or ex-felon, or income level.

To be eligible for a Sales Tax Exemption, equipment must be purchased for use anywhere in California. Qualified equipment includes equipment primarily used for manufacturing and in research and development (R&D). The exemption is given at the time of equipment purchase and extends through July 2022.

The California Competes Credit is an extremely valuable credit to businesses which are growing, hiring, expanding, or thinking of leaving the state. Businesses will qualify for this credit based on the following factors:

a) number of jobs created or retained in California
b) compensation proposed to be paid to employees
c) taxpayer’s investment in California, and
d) unemployment and poverty levels in the census area for taxpayer’s project or business.

Businesses must go through an online application process and the credit is then spread over four years. The minimum credit a business may request is $20,000.

If your business would like to see if they quality for any or all of these tax credits, feel free to contact Edward Lieber!