Tax credits target California businesses

Pasadena Star News
By: Cynthia Kurtz
Posted: 1/08/2014

Many states have been trying blatantly to woo California’s businesses but now California is ready to fight back. January 1 marks the beginning of the California Compete Tax Credit Program which will reward businesses that add or move jobs into the state.

$30 millions of tax credits are available this year to reduce business income and franchise taxes for eligible companies. That number grows to $150 million in fiscal year 2014-15 and $200 million in 2015-16 and 2016-17. 

The Program is being administered by GO-Biz, the Governor’s Office of Business and Economic Development. The program was designed to give GO-Biz flexibility so the credits can be allocated to best meet a regional or statewide need. 

Go-Biz has the ability to negotiate the amount of tax credit a business can receive based on the overall economic impact for California. That means they will consider factors such as the number of jobs, employee wages, the extent of unemployment where the business is locating or expanding, and opportunity for future growth.

In order to assure the credits are maximizing the benefits to the state, region or locality the “California Compete Tax Credit Committee” will have ultimate approval. That Committee is composed of the State Treasurer, the Director of the Department of Finance, the Director of Go-Biz, one appointee of the Senate and one appointee of the Assembly.

The tax credit isn’t just for big businesses. Recognizing that most new jobs come from small businesses, the state allocated 25 percent of the credit available in any year for small businesses.

While a tax credit can’t be used to reduce an individual company’s taxes below the minimum tax, the credits can be carried over to reduce taxes for up to five years.

The state Franchise Tax Board has the responsibility of assuring compliance and will review the records of all large businesses which are allocated a tax credit by GO-Biz. For small businesses, the Tax Board’s review will be on an as-needed basis.

I know there are San Gabriel Valley businesses that are planning to expand in the next few years. Some of these businesses haven’t yet decided whether to expand here or in another state. This is the program designed to keep you and your expansion here. 

Applications will be accepted during the first quarter of 2014. Information is available on the Go-Biz website. The Business Development team at the San Gabriel Valley Economic Partnership is also ready and eager to help get you more information. 

So take that Texas. California is open for business.