California’s Enterprise Zones
California’s Enterprise Zone Program targets economically distressed
areas throughout the state. Special state and local incentives encourage
business investment and promote the creation of new jobs. The purpose
of the Zone program is to provide tax incentives to businesses and allow
private sector market forces to revive the local economy.
Enterprise Zone companies are eligible for substantial tax credits
and benefits including:
- Hiring Tax Credits - Firms can earn $31,574 or more in State tax
credits for each qualified employee hired
- Sales and Use Tax Credit - Zone companies may receive a sales tax
and use tax credit for manufacturing or processing machinery, data
processing and communications equipment and motion picture manufacturing
equipment central to production and post production, to be used in
the Zone. Individuals can claim a credit on the first $1,000,000 of
qualifying purchases, while corporations can claim credit on the first
$20,000,000 per year.
- Business Expense Deduction - Up front expensing of certain depreciable
property
- Net Operating Loss Carryover - Up to 100% of the NOL may be carried
forward for 15 years
- Net Interest Deduction - Lenders to Zone business may receive a
new interest deduction
- Unused tax credits can be applied to future tax years
- Enterprise Zone companies can earn preference points on state contract
