What is the California Competes Tax Credit?
The California Competes Tax Credit is an income tax credit available to businesses that want to locate to California or stay and grow in California and create quality, full-time jobs in California that might not otherwise be created by the business of any other business. Tax credit agreements will be negotiated by Go-Biz and approved by a statutorily created by “California Competes Tax Credit Committee” consisting of the State Treasurer, the Director of the Department of Finance, the Director of Go-Biz, and one Appointee by the Speaker of the Assembly and senate Committee on Rules.
How much in Tax Credits will be available?
The tentative amount of credits that can be allocated by Go-Biz is as follows:
– $180 Million in each fiscal year 2018-2019 and 2022-2023
Can any business apply for the California Competes Tax Credit? Is the credit restricted to only certain industries or locations in California?
Any business can apply for the California Competes Tax Credit. The credit is available statewide to all industries. However, while there are no geographic or sector-specific restrictions, the purpose of
the California Competes Tax Credit is to attract and retain high-value employers in California in industries with high economic multipliers and that provide their employees good wages and
GO-Biz is required by statute to consider the extent to which the credit will influence the business’s ability, willingness, or both, to create new, full-time jobs in this state that might not otherwise be
created in the state by the taxpayer or any other taxpayer.
How much credit should I request?
A business should request the amount of credit that it needs to be able to commit to implementing its proposed project. In the Proposed Project narrative, you should explain not only why your
business “needs” a credit, but specifically how the amount of credit you are requesting will enable or incentivize your business to create new full-time jobs that might not otherwise exist in California.
How does a business demonstrate the extent to which the credit it is requesting will impact its ability/willingness, to create jobs in California that might not otherwise be created by the business or any other business?
In Phase I, a business has the opportunity in the Proposed Project section of the application to explain the role this credit will play in its willingness/ability to commit to its proposed California expansion. This project narrative should address (but not be limited to) the following questions:
• What does the business do? What are its products or services?
• Where are its customers/clients located?
• Do the jobs it is proposing to create have to be in California?
• Are its competitors located in or outside of California?
• Are these kinds of jobs reliant upon local market demand?
• How will the amount of credit the business is requesting over the 5-year period enable or incentivize its decision to proceed with the California expansion?
• Is the business considering expanding (or moving operations) outside of California?
o Has it identified a specific site or city?
o Has it conducted a comprehensive cost comparison between the sites?
What is the maximum ratio that will move my application to the Phase II evaluation process?
Because the California Competes Tax Credit is based on a competitive application process, the maximum ratio for an application to move into Phase II is not set and can vary during each application period. For historical reference only, below are the cutoff ratios for the application periods to date:
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