Is the CCTC refundable?

The CCTC isn’t refundable, but each year of the credit allocation can be carried forward for six years.

How do you qualify for the CCTC?

The CCTC is open to businesses of any industry, size, or location that meet one of the following criteria: California-based companies planning to expand Companies contemplating leaving California Out-of-state companies planning to relocate operations to California or start business operations there The credit is awarded through a competitive application process where applications are reviewed on several factors, including the number of full-time jobs being created, and the proposed wages paid to those employees. GO-Biz will analyze the amount of investment and review any training programs conducted by the applicant. GO-Biz will also weigh the strategic importance of the applicant’s industry to the state or region.

How do you qualify for the program?

The program is open to any size of business across multiple industries. The program has placed a moratorium on providing awards to some specific industries, including adult entertainment, gambling, and multilevel marketing, and has also outlined the following priority industries: Accommodation and food services Administrative and support and waste management and remediation services Agriculture, forestry, fishing, and hunting Arts, entertainment, and recreation Construction Finance and insurance Healthcare and social assistance Information Manufacturing Mining, quarrying, and oil and gas extraction Professional, scientific, and technical services Transportation and warehousing Utilities Wholesale trade

What’s the process of claiming the incentive?

There are multiple phases to the application process. Preliminary application. Panel staff determines basic eligibility. Regional office site visit. If the preliminary application is deemed eligible, the ETP regional office will contact the company to schedule a site visit to review the applicant’s training program and discuss contracting requirements. Application for funding. After the site visit, an ETP analyst will assist the company with their application and help finalize contract terms and conditions. Panel approval. The panel will review all training applications at regular monthly meetings. A company representative may be required to attend the panel meeting for a brief presentation or to address questions.

What benefit could be available?

CAEATFA offers a sales and use tax exclusion to manufacturers that promote alternative energy and advanced transportation. For 2023, the program had a statutory cap of $115 million that will likely be mostly exhausted as of CAEATFA’s July 2023 board meeting. In 2024, the program will be funded for another $115 million, which includes $15 million set aside for lithium battery manufacturers. CAEATFA also sets aside $20 million of the $115 million total allocation for smaller projects seeking an STE award of $2 million or less. Applicants are limited to $10 million of STE in a given calendar year.

How do you qualify for the benefit?

A taxpayer qualifies to apply for the STE if the project facility is located in California and is described as one of the following categories of manufacturers in California: Alternative source product. Technologies related to renewable electricity and fuel generation or energy efficiency technologies. Advanced transportation technologies. Emerging transportation-related technologies that enhance California’s commitment to energy conservation, pollution and greenhouse gas emissions reduction, and transportation efficiency. Advanced manufacturers. Improving or creating materials, products, or processes in the fields of macro or nano electronics, additive manufacturing, and industrial biotechnology, among others. Recycled feedstock. Manufacturing or utilizing recycled feedstock in the production of another product or soil amendment. Recycled feedstock refers to materials that would otherwise be destined for disposal, having completed their intended end use and product lifecycle. The project should also provide for an increase in the California workforce within these sectors, with wages paid to project employees matching or exceeding the median wages for the project location.

What’s the process of claiming the benefit?

Taxpayers must apply to the CAEATFA board during one of the application periods. The application submitted by the taxpayer will be composed of two parts: Part A includes a project narrative, legal questionnaire, and applicant certification. The project narrative includes information about the applicant and the proposed project, including the timeline and status of required permits. Part b consists of a self-scoring Excel spreadsheet designed to measure and quantify the net fiscal and environmental benefits of the proposed project. Based on the inputs provided by the applicant, the spreadsheet calculates the number of points received by the project. The formulas for determining the points awarded may be found in CAEATFA regulation section 10033(c). CAEATFA staff review each application for completeness and reasonableness of the assumptions provided in the application. During the review process, staff may request supporting documentation and additional details on the manufacturing process. Applicants may also be asked to provide other information including business plans, pro-forma financial statements, etc. Taxpayers must pay an application fee when submitting. The fee is calculated as .05% of the value of the property included in the application. The minimum fee is $250, capped at $10,000. If the taxpayer is awarded the STE, it can provide documentation in the form of an exemption certificate to its vendors when purchasing property included in the application. This certificate will exempt the taxpayer from sales taxes on its purchase of the qualified property.

How do you qualify for the benefit?

Eligibility requirements vary based on project location, but each location has its own project cost, applicant, installation site, equipment, and meter requirements. Only certain equipment costs are eligible for rebate funds. These costs are determined on a location-by-location basis.

What’s the process of claiming the credit?

The process to claim a credit varies depending on project location. All locations require that the taxpayer be an eligible applicant with a qualified installation site and file a formal application by a specific deadline.

How do you qualify for the NEC?

An employer must be engaged in a trade or business in California within a designated geographic area (DGA), pay qualified wages, not be an excluded business, and must have a net increase in jobs. Governor Gavin Newsom signed Senate Bill 131 into on July 10, 2023, which removes the DGA requirement for companies in the semiconductor manufacturing, lithium production, lithium battery manufacturing, and electric airplane manufacturing industries.

What’s the process of claiming the credit?

A Tentative Credit Reservation (TCR) from the Franchise Tax Board (FTB) is needed to qualify an employee before receiving the credit. An applicant must request a TCR within 30 days of completing the Employment Development Department new hire reporting requirements. Any unused credit may be carried forward up to five years on an original return. However, if a qualified employee is terminated within the first 36 months after beginning employment, you may be required to recapture previously taken credits. The amount of credit that may be recaptured is the amount for that taxable year and all prior taxable years attributed to qualified wages paid to that employee.

Article

California incentives to help increase cash flow for your business

Q: How much money could be available?

For FY 2023–24, the ETP has the following funding allocations available by contract category. Each contract category also has a maximum reimbursement per awardee.

Q: How much money could be available?

Available funds depend on which region a project is located and what type of charger station is being installed. The CALeVIP website tracks funds by location and charger type (DC or L2) and will show which funds are reserved provisionally, reserved for disadvantaged communities, issued, and remaining available.

Sept. 10, 2023 · Authored by Gabriel Sermeno, Evan Krueger

California offers a range of tax incentives for businesses considering relocating to California, hiring and retaining new employees, working to reduce greenhouse gas emissions, installing electric vehicle (EV) charging stations, and more.

Top California business incentives include:

California competes tax credit (CCTC)
California employment training panel (california ETP)
California alternative energy and advanced transportation financing authority (CAEATFA)
California electric vehicle infrastructure project (CALeVIP)
New employment credit (NEC)

Other programs include California Air Resources Board (CARB) related EV programs and California Energy Commission EV manufacturing grants.

California competes tax credit (CCTC)

Administered by the Governor’s Office of Business and Economic Development (GO-Biz), the CCTC program aims to attract and retain high-value employers in California that provide strong wages and benefits. The CCTC is available to businesses — regardless of size or industry — with plans to grow new full-time jobs in California.

Companies can apply for this income tax credit during any of the three predefined application rounds each year. As more organizations look for ways to reduce costs, CCTC funds are increasingly competitive to secure.

How much money could be available?

In the budget, which has been passed for fiscal year (FY) 2023–24, GO-Biz has been allotted just over $490 million in tax credits over three application periods. Applicants may request up to 20% of the total amount available each year.

Gabriel Sermeno

Director

Related sections

Pacific coastline, view from Highway number 1, California

Next up

California’s climate disclosure regulations: An update on SB 253 and SB 261

Discover more

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

California incentives to help increase cash flow for your business

California competes tax credit (CCTC)

How much money could be available?

Gabriel Sermeno

Related sections

California’s climate disclosure regulations: An update on SB 253 and SB 261

Is the CCTC refundable?

How do you qualify for the CCTC?

Recommendations for applicants

California employment training panel (ETP)

How much money could be available?

How do you qualify for the program?

What’s the process of claiming the incentive?

Recommendations for applicants

California alternative energy and advanced transportation financing authority (CAEATFA)

What benefit could be available?

How do you qualify for the benefit?

What’s the process of claiming the benefit?

Recommendations for applicants

California electric vehicle infrastructure program (CALeVIP)

How much money could be available?

How do you qualify for the benefit?

What’s the process of claiming the credit?

Recommendations to applicants

New employment credit (NEC)

How much money could be available?

How do you qualify for the NEC?

What’s the process of claiming the credit?

California air resources board (CARB) related EV-related programs

California energy commission (CEC) EV manufacturing grants

Have questions? Baker Tilly can help.