Learn More About the California Competes Tax Credit

The revenue and jobs that come from businesses setting up shop are critical to a state thriving, so tax incentive plans are becoming increasingly popular – and competitive – to lure business from one state to the next. The California Competes Tax Credit is an incentive plan to attract businesses to the Golden State, while encouraging existing companies to keep growing.

The income tax credit is offered to businesses that are expanding or moving to California. Approved by Gov. Jerry Brown in 2013, California Competes is a successor program to the Enterprise Zone Tax Credit which will be phased out in 2014.  The amount of credits available will increase over several years: $30 million in 2013-14; $150 million in 2014-15; and $200 million in each year through 2017-18.

The credit, available to any individual business, will be based on criteria such as the number of jobs created and opportunity for future growth.  To qualify for a portion of the allocation, the business must have expansion plans to create jobs in California over the next five years or be at risk to leave California. 

The tax package includes:

  • A reduction in the amount of sales tax a business pays on the purchase of equipment for manufacturing, food processing, biotech, and research and development.
  • A California Competes income tax credit, negotiated by the Governor's Office of Business and Economic Development, for companies that invest in new jobs anywhere in the state.
  • A New Employment Credit on income taxes for boosting the number of jobs for veterans, public assistance recipients and former prisoners in targeted areas with high unemployment and poverty levels.

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