California Competes Tax Credit
The California Competes Tax Credit is an income tax credit available to businesses that want to come to California or stay and grow in California. Unlike the Enterprise Zone program this program is statewide. Thus, there are no geographic restrictions. Tax credit agreements will be negotiated by GO-Biz and approved by the “California Competes Tax Credit Committee.” The Governor just approved a 5-year extension of the program.
Created as part of the Tax Cuts and Jobs Act, Opportunity Zones are a federal economic development tool aiming to improve the outcomes of distressed communities around the country. Opportunity Zones are low-income census tracts that offer tax incentives to groups who invest and hold their capital gains in Zone assets or property. By investing in Opportunity Zones, investors stand to gain a temporary deferral on their capital gains taxes if they hold their investments for at least 5 years, and a permanent exclusion from a tax on capital gains from the Opportunity Zones investments if the investments are held for 10 years. http://dof.ca.gov/Forecasting/Demographics/opportunity_zones/
(Partial) Sales and Use Tax Exemption
A partial exemption of sales and use tax on certain manufacturing biotechnology and research and development equipment purchases is available. The partial exemption applies only to the state sales and use tax rate portion, currently at 4.1875 percent. The exemption does not apply to any local, city, county, or district tax. All manufacturers (NAICS Codes 3111 - 3399, inclusive), Research and Development in Biotechnology and Research and Development in the Physical, Engineering, and Life Sciences (NAICS Codes 541711 and 541712, respectively).
(Full) Sales and Use Tax Exclusion – Advanced Manufacturing & Transportation and Alternative Energy
A sales tax exclusion from both state and local sales tax collection on equipment purchases for qualifying businesses that conduct qualifying activities. Sales tax rates vary by jurisdiction (typically 7% to 9.25%).
New Employment Hiring Tax Credit (NEC)
The New Employment Credit (NEC) is available for each taxable year beginning on or after January 1, 2014, and before January 1, 2021, to a qualified taxpayer that hires a qualified full-time employee on or after January 1, 2014, and pays or incurs qualified wages attributable to work performed by the qualified full-time employee in a designated census tract or economic development area, and that receives a tentative credit reservation for that qualified full-time employee.
California Research & Development Tax Credit
Corporate income tax credits are available to companies that have incurred qualified research expenses in California. A taxpayer qualifies for the credit if it paid or incurred qualified research expenses while conducting qualified research in California. The taxpayer may receive up to 15 percent of the excess of current year research expenditures over a computed base amount.
In an effort to harness and enhance California’s innovative spirit, the state of California launched its forward-thinking Innovation Hub (iHub) program. The iHub program improves the state's national and global competitiveness by stimulating partnerships, economic development, and job creation around specific research clusters through state-designated iHubs. http://www.business.ca.gov/Programs/Innovation.aspx
The federal government has designated sections of several California communities as Renewal Communities, Empowerment Zones and Enterprise Communities (RC, EZs and ECs). The cities of Fresno, Los Angeles, Santa Ana, San Diego, San Francisco, Orange Cove, Parlier, and the counties of Imperial and Riverside have designated RCs, EZs or ECs.
Foreign Trade Zones
California's Foreign Trade Zones (FTZ) are located in San Francisco, San Jose, Long Beach, Oakland, West Sacramento, San Diego, Palmdale, Los Angeles, Port Hueneme, Merced/Madera/Fresno/Tulare counties, Kern, County, Stockton, Palm Springs, Santa Maria, Victorville, Eureka and Imperial, Butte and Riverside counties. FTZs are secured areas legally outside of U.S. customs territory usually located in or near customs points of entry. FTZs allow entry of foreign or domestic merchandise without formal customs entry or government excise taxes.
Net Operating Loss Carryover and Carryback
If you’re like most business owners, you won’t see a profit in your first year of operation. As your business grows, you may face one or more years in which your business’ expenses exceed its income. In other words, the business may have a loss, which may translate into a Net Operating Loss (NOL) deduction. How this loss can be used to offset other income depends upon how your business is structured. California law allows businesses to use Net Operating Loss carryovers. California now has NOL carry backs. https://www.ftb.ca.gov/law/legis/17-18bills/ab2855-021618.pdf
PG&E Enhanced Economic Development Rate (E-EDR)
For qualifying businesses expanding or locating in the Central Valley, Pacific Gas & Electric offers a reduction of commercial and industrial electrical rates of up to 25% for up to five years. http://centralcalifornia.org/wp-content/uploads/2018/11/2018-PGE-ED-Rate.pdf
For qualifying businesses expanding or locating in the Central Valley, Pacific Gas & Electric offers a reduction of industrial electrical rates of up to 25% for up to five years.