On June 18th California awarded approximately $50 million of California Competes tax credits to 63 taxpayers. These companies promised to add over 11,000 jobs and invest $3.4 billion in the California economy.1 The credits granted ranged from $15 million for Tesla Motors to businesses receiving the minimum credit of $20,000. The program is required to grant 25% of the credits to small businesses. It is interesting to note that credits were granted to several businesses that committed to hiring a modest number of employees (2 to 4) with no plans for significant capital investments. 2
The application periods and award amounts for fiscal year 2015-2016 have been announced:
- July 20 to August 17, 2015 ($75 million)
- January 4 to January 25, 2016 ($75 million)
- March 7 to March 28, 2016 ($51 million)
If your company is expanding operations in California you may qualify for the credit but you will not receive a credit unless you apply!
- GO-Biz California Competes Committee Approves $49.8 Million in Tax Credits for 63 Companies Adding Over 11,300 Jobs in California↩
- UPDATE: The California Competes Tax Credit Committee APPROVED the following agreements on June 18, 2015↩
Previous Blog Post from March 4, 2015:
California introduced a new tax credit in 2014. The California Competes credit was part of Gov. Brown’s plan to replace existing Enterprise Zone (EZ) tax incentives. Unlike the EZ tax benefits which were only available to taxpayers operating in specific designed economic development zones the California Competes credit may be claimed by taxpayers operating anywhere in the state.
The credit is targeted to businesses that are entering California, expanding their existing California operations or considering a move out of state. All types of business entities (sole proprietorships, partnerships, limited liability companies, C’s and S corps) are eligible for the credit.
The credit is awarded based on a competitive application process with 25% of the credits reserved for small businesses. The application must be completed on-line (click here) with the Governor’s Office of Business and Economic Development. The next application period will open March 9th until April 6th with approximately $31 million of credits to be awarded.
If your business is expanding in California the credit is a great source to partially fund that expansion by lowering your tax liability.