California Enterprise Zone Tax Credit
The State of California has established 42 business incentive zones spanning all area of the state. The purpose of these “Enterprise Zones” is to encourage economic growth, reduce unemployment and serve as an attraction and retention tool for cities. Businesses operating in one or more of the 42 Enterprise Zones are eligible for California income tax credits based on qualified hires, investments in equipment and lending. Of the tens of thousands of companies located in state Enterprise Zones, only about 10-15% are actually taking advantage of the substantial tax breaks. This general lack of participation can be attributed to the complex nature of the program and a lack of awareness.
Enterprise Zone companies are eligible for substantial tax credits and benefits including:
- Hiring Credits – Firms can earn $37,440 or more in state tax credits for each qualified employee hired.
- Up to 100% Net Operating Loss (NOL) carry-forward; in most cases up to 15 years.
- Corporations can earn sales tax credits on purchases of up to $20 million per year of qualified machinery.
- Up-front expensing of certain depreciable property. Lenders to Zone businesses may receive a net interest deduction.
- Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment.
Persons or entities engaged in a trade or business in an Enterprise Zone may be eligible for program benefits, which include several state and local incentives. There are currently 42 Enterprise Zones located throughout California.
For a complete listing of all active Enterprise Zones, or any other questions please email us at email@example.com