Businesses planning to add jobs in California can apply for a new state tax credit meant to spur hiring.
The Governor’s Office of Business and Economic Development (GO-Biz) last week began accepting applications for the California Competes tax credit. The agency, which will take applications through April 14, has until June 30 to distribute $30 million. 25% of funds are reserved for small businesses (gross receipts of less than $2 million). No more than 20% will be allocated to any one taxpayer. The tax credits are meant for companies that promise to create well-paying jobs, with benefits and other perks.
As part of the 2010 Patient Protection and Affordable Care Act, Congress passed the new 3.8% tax. This tax is outlined in the Internal Revenue Code Section 1411. The Final Regulations Section 1.1411 were recently issued, providing guidance, clarification, and recommendations to some uncertainties that arose with the proposed regulations.
On July 1, the start of fiscal year 2015, the state will increase the amount of credits available from California Competes to $150 million. In fiscal 2016 and 2017, businesses can compete for $200 million in credits each year.
California Competes was one of three tax-credit program that Governor Jerry Brown and the Legislature approved last year. The second program eliminates that state sales tax for certain major-equipment purchases, and the third offers a partial hiring credit for certain residents, including the long-term unemployed and recently discharged military veterans.
For additional information, please go to the GO-Biz website.