Enterprise Zone companies are eligible for the following tax credits:
The purpose of the California Enterprise Zone program is to stimulate business and industrial growth in the depressed areas of the state by relaxing regulatory controls that impede private investment and help attract, retain and expand business activity, as well as create increased job opportunities. The tax credits are as follows:
Hiring Tax Credits – Allows zone-located businesses to claim a state income tax credit based on the wages paid to qualifying employees. Each qualifying employee can generate more than$10,000 in tax credit during the first 12-months of employment, and more than $37,000 during a 5-year term of employment. Unused or extra credit will carry forward to offset future tax liabilities. We manage the entire process with minimal time required from you or your staff.
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 to used in the Zone. Corporations can claim credit on the first $20,000,000 of qualifying purchases per year.
Net Interest Deduction for Lenders – Net Interest Deductions for lenders on loans made to firms within an Enterprise Zone. (Businesses can use this as leverage when negotiating for a loan and possibly receive better terms or a lower interest rate simply by being in the Enterprise Zone).
Net Operating Loss Carryover – Businesses located in the Enterprise Zone have the option of carrying over 100% of their net operating losses over 15 years on state tax filings.
For taxable years beginning in 2010 and 2011, California has suspended the NOL carryover deduction. Taxpayers may continue to compute and carryover NOLs during the suspension period. However, taxpayers with net income after state adjustments or modified adjusted gross income of less than $300,000 or with disaster loss carryovers are not affected by the suspension rules. Prior to this the NOL carryover deduction was suspended beginning in 2008 and 2009. Taxpayers with taxable income or net business income of less than $500,000 or with disaster loss carryovers were not affected.
