Starting or Relocating a Business Within California? Check out these Little-Known Tax Incentives
The State of California offers numerous incentives and assistance programs to businesses of all sizes and industries that are considering expansion into the Golden State, whether they plan to have 3, 50, or 20,000+ employees.
From tax breaks, to help with site selection, to employee training, and development bonds, there are numerous government-sponsored programs in place to help small to large businesses successfully transition to opening business in the state. Below are some examples of the types of business support available in California.
Programs and Services from GO-Biz, The Governor’s Office of Business and Economic Development
Site Selection Assistance
GO-Biz will conduct a confidential site selection search on your behalf, or provide you with a broker to guide you through the local commercial real estate market.
In addition, GO-Biz will send out a Request for Information to city managers and economic development departments to obtain off-market information about city, state, and county-owned properties available for lease for discounted rates, even as little as $1.00 per year.
Provides permit identification and assistance with regulatory compliance for small businesses.
A process whereby a permit applicant can request to have all of its state environmental permits coordinated by one agency, saving businesses valuable time and money.
California Infrastructure and Economic Development Bank (I-Bank)
Available only to US-based companies, this program finances public infrastructure and private development through authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds. This program does not apply to retail or restaurant enterprises.
STATE TAX INCENTIVES
California Competes Tax Credit (competitive)
A negotiated, corporate income tax credit administered by GO-Biz, where credits are awarded on a competitive, merit-basis to companies or projects that provide defined benefits to the state. To apply, companies must submit a five-year business plan and prove that they are creating jobs in California.
New Employment Credit (geographic)
A corporate income tax credit available 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 geographic area or GO-Biz designated Pilot Area.
California Research Credit
Income tax credit on the increased in qualified research expenses conducted for qualified research in California over a computed base year.
(Full) Sales and Use Tax Exclusion
A sales and use tax exclusion for advanced manufacturers and manufacturers of alternative source and advanced transportation products, components or systems.
(Partial) Sales and Use Tax Exemption
An exemption from the state’s portion of sales or use tax on certain manufacturing, biotechnology and research and development equipment purchases and leases, software or construction costs for related improvements.
State Training and Workforce Development
Employment Training Panel
A performance based, cash reimbursement opportunity for employer-sponsored training.
California Workforce Investment Board
An appointed body that oversees the State’s responsibilities under the federal Workforce Investment Act, which provides workers with access to information and services to enhance their careers, and to help U.S. companies find skilled workers.
Apprenticeship Standards Program
Regulatory assistance for the establishment of apprenticeship programs. Each program operates under apprenticeship training standards agreed to by labor and/or management in accordance with State and Federal laws, under which a person works with a skilled worker and gains on the job skills and “know-how.”
State Financial Assistance
Industrial Development Bonds
Tax-exempt securities issued up to $10 million to provide financing for the acquisition, construction, rehabilitation and equipping of manufacturing and processing facilities for private companies.
Pollution Control Tax Exempt Bond
Private activity tax-exempt bond financing to California businesses for the acquisition, construction, or installation of qualified pollution control, waste disposal, waste recovery facilities, and the acquisition and installation of new equipment.
Economic Development Rate
Through the respective IOU, this program provides eligible businesses with a 12 or 30 percent discount on electricity—depending on the location of the business. These rates are available to businesses with high energy loads that currently operate or are considering operating in California.
Property Assessed Clean Energy Financing
Provides 100% financing for energy efficiency and renewable energy upgrades to commercial and industrial buildings repaid (off-balance sheet) as a property tax assessment for up to 20 years.
Self-Generation Incentive Program
This program provides rebates for qualifying distributed energy systems installed on the customer’s side of the utility meter. Qualifying technologies include: wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and advanced energy storage systems.
California Industry Assistance Credit
For industrial businesses, an emissions leakage abatement credit is available. Emissions leakage is when emissions decrease within California, but increase outside of California. AB 32 requires the State to minimize leakage to the extent feasible. This credit protects eligible industrial sectors against emissions leakage by compensating them for a portion of the GHG emission costs associated with the electricity they buy. Utilities will distribute this credit annually.
Federal Tax Incentives
Business Tax Credits
Your general business credit for the year consists of your carryforward of business credits from prior years plus the total of your current year business credits. In addition, your general business credit for the current year may be increased later by the carryback of business credits from later years. This credit is directly deducted from your tax.
Work Opportunity Tax Credits
A federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.
Credit for Increasing Research Activities
A credit against federal income taxes for increasing research activities.
New Market Tax Credits
A credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified community development entities (CDEs).
Overwhelmed? Interested in learning more? Contact The Grady Firm’s experienced business attorneys and attend one of our upcoming information sessions on California incentives.
About The Grady Firm, P.C.
The Grady Firm, P.C. attorneys specialize in helping businesses grow and succeed through employment, business, and immigration law advising for clients in California. They help perform personnel audits, draft/revise Employee Handbooks, train employers on employment law compliance, provide on-demand legal analysis for hiring and firing questions, and provide leadership and sexual harassment training in English and Spanish.
To learn more about ensuring your business is compliant with state and local laws, schedule a complimentary 15-minute consultation with The Grady Firm’s attorneys; call +1 (949) 798-6298; or fill out a Contact Request Form.
*This article is for informational purposes only, and does not constitute legal advice or create an attorney-client relationship. This article does not make any guarantees as to the outcome of a particular matter, as each matter has its own set of circumstances and must be evaluated individually by a licensed attorney.
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