Incentive Zones & Tax Credits
Nearly all of Tracy’s commercial and industrial properties are located within the San Joaquin County Enterprise Zone. The Enterprise Zone program targets economically distressed areas throughout California, providing special incentives designed to encourage business investment and promote the creation of new jobs. The purpose of the program is to stimulate development by providing 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 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. NOL may be carried forward 15 years;
- Corporations can earn state tax credits on purchases of qualified machinery and machinery parts;
- Up-front expensing of certain depreciable property. Lenders to Enterprise 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;
- Enterprise Zone companies can earn preference points on state contracts
To find out if your business is located within the Enterprise Zone boundaries, please download the Enterprise Zone Map and locate your business, or contact the Economic Development Department at (209) 831-6490.
Research and Development Tax Credit (CA Franchise Tax Board Business Tax Credits)
The California R&D Tax Credit offers a permanent tax credit for qualified research expenses incurred while conducting qualified research in California. Designed to encourage companies to increase their basic research and development activities in California, the R&D tax credit allows companies to receive a credit of 15% for qualifying in-house research expenses and 24% for basic research payments to an outside company or university. Qualifying expenses include:
- Employees wages for researchers, supervisors and support services
- Supplies used in conducting the research
- Amounts paid to outside consultants for the right to use personal property for research
For more information please download the Research and Development Tax Credit Frequently Asked Questions brochure.
California Alternative Energy & Advanced Transportation Authority (CAEATFA)
California Alternative Energy & Advanced Transportation Authority (CAEATFA) provides eligible projects financial assistance in the form of a sales and use tax exclusion on the purchase of zero-emission vehicle and clean technology manufacturing equipment. Businesses must apply for the tax exemption and receive approval through the CAEATFA Board. This program will sunset in 2020. More information and applications are available at: www.treasurer.ca.gov/caeatfa/sb71/index.asp.
New Jobs Credit
A temporary incentive, this credit is for small businesses that create jobs in the next two years. Employers that began the year with 20 or fewer employees could claim a $3,000 credit for each full-time employee hired. California allocated $400,000,000 for this tax credit. Taxpayers may only claim the credit on an original timely filed return received by the FTB on or before a cut-off date specified by FTB. The cut-off date is the last day of the calendar quarter within which FTB estimates it will have received timely filed original returns claiming the credit that cumulatively total $400 million.
For more information regarding the New Jobs Credit please visit http://www.ftb.ca.gov/businesses/new_jobs_credit.shtml.