California on Business Facilities Online

CALIFORNIA Fast Facts

• Population (2008): 36,756,666
• Largest Cities (2008): Los Angeles, 3,833,995; San Diego, 1,279,329; San Jose, 948,279;
   San Francisco, 808,976; Fresno, 476,050
• Targeted Industries: Clean Technology, Alternative Energy, Tourism, Healthcare, Agriculture
• Key Incentives: R&D Tax Credit, Employment Training Panel, California Alternative Energy and Advanced
   Transportation Authority
• GDP (All Industry 2008): $1.8 trillion*

*Bureau of Economic Analysis, U.S. Department of Commerce

CALIFORNIA State Incentives

Enterprise Zones offer tax credits to companies that are located within them. The first major Enterprise Zone tax credit is equivalent to the sales and use tax paid on the first $20 million of qualified new or used manufacturing equipment purchased each year. The second major Enterprise Zone benefit takes the form of a credit equal to a percentage of the wages paid to a qualified employee. The credit is based on the lesser of the actual hourly wage or 150% of the state-established minimum wage. Other Enterprise Zone benefits that may apply in certain cases include a 15-year carryover of up to 100% of net operating losses and expensing of certain depreciable property.

Local Agency Military Base Recovery Areas (LAMBRA) are a companion to Enterprise Zones. The most notable differences in incentives include enhanced equipment purchase eligibility under the sales and use tax credit; an annual wage limitation of $2 million per year under the hiring tax credit; and redefinition of qualified employees to include displaced military or civilian employees of the former base.

Brawley and Calexico, California's two Manufacturing Enhancement Areas are focused on stimulating job creation in the Border region of Southern California. Special state and local incentives encourage business investment and promote the creation of new jobs. Program benefits include streamlining local regulatory controls, reduced local permitting fees, and eligibility to earn $29,234 or more in state tax credits for each qualified employee hired.

Net Operating Loss Carryover allows businesses that experience a loss for the year to carry this loss forward to the next year in order to offset income in the following years. New businesses can carry over 100% of their losses for 10 years if the loss is in their first year of operation.

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