State of California Offers New Economic Development Incentives

Monday, October 28th, 2013

Governor Brown at the signing ceremony in San Diego. (Photo credit: www.business.ca.gov)

With the passage of AB93 & SB90, the Governor’s Office of Business and Economic Development (GO-Biz) will begin implementing the “California Economic Development Initiative” to reshape and strengthen the state’s economic development tax programs and bolster California’s business environment to put Californians back to work. The new program includes a manufacturing sales and use tax exemption, hiring credits and investment incentives. 

  • The Manufacturing Sales and Use Tax Exemption is a statewide sales tax exemption on manufacturing equipment or research and development equipment purchases by companies engaged in manufacturing or biotechnology research and development including food processing equipment, food processing R&D equipment, manufacturing R&D equipment, biotech manufacturing and R&D equipment and necessary tenant improvements (ex: clean rooms for biotech, manufacturing, etc.). A business will be allowed to exclude the first $200 million equipment purchases from the state share of sales tax (4.19%) beginning on July 1, 2014.
  • The Hiring Credit is for businesses located in census tracts with the 25% highest share of both unemployment and poverty in the state. The hiring credit will be available for the hiring of long-term unemployed workers, veterans within 12 months of separation from service, people receiving the Federal earned income tax credit, ex-offenders and recipients of CalWorks or general assistance. The hiring credit will only be allowed to taxpayers who have a net increase in jobs and will be will be 35% of wages above $12 an hour & up to $28 an hour (or above $10 an hour base in limited pilot areas) for a period of five years. The hiring credit is available for employees hired between January 1, 2014 and January 1, 2021.
  • The California Competes Credit will be created and administered by GO-Biz. Businesses will have the opportunity to compete for available tax credits and 25% of these credits will be designated for small businesses. Criteria for competition includes the number of jobs to be created or retained, the extent of poverty in a business development area, a minimum compensation limitation and a set job retention period. GO-Biz anticipates beginning to accept applications during the first quarter of 2014. Click here to read the California Competes Tax Credit FAQs.

With the new programs taking effect in early to mid 2014, now is the perfect time for businesses to begin planning for the new year and assess how they can take advantage of opportunities for growth. 

The Riverside County Workforce Development Center is a valuable resource that is already in place for businesses to post job openings, find qualified candidates and access a wide variety of information designed to help a business succeed. The Workforce Development Center serves as a one-stop center for access to a wide range of resources beyond recruitment including information about labor market statistics, local, state or federal tax incentives for employers, human resources , training programs and labor relations resources. To learn more about the Workforce Development Center and access the tools, visit www.RivCoJobs.com.