Tax Incentive Programs

The tax incentive programs established by the State of California promote innovation, development, and growth. The California Competes Tax Credit, Main Street Small Business Tax Credit, Opportunity Zones, and other like programs provide opportunities to California’s small businesses to grow and expand.

California is the 5th largest economy¹ in the world, leads in business starts² and is driven by the State’s strong innovation and startup culture. It leads the nation in business starts,³ innovation,⁴ and venture capital funding.⁵ With its heralded colleges, universities, labs and research institutions, California outspends all other states in research and development expenditures, accounting for over one-fifth of the total U.S. research and development spend⁶ and 28.5 percent of U.S. origin patents.⁷ California based firms are redefining how we live and are solving global challenges with innovative ideas, products and solutions – the future happens here first.⁸

California continues to hold a strong position thanks to its robust tax incentive programs that help expand businesses to other parts of the state and/or attract new businesses. These programs also provide free or low-cost technical assistance services to help you navigate the application process and connect to other resources, including grants and financing assistance.

California funds a network of small business technical assistance centers that provide no-cost one-on-one consulting and low-cost training services to small businesses and entrepreneurs with all stages, including but not limited to:

Startup business plans
Access financing (i.e., loans and grants)
Enter new markets
Strengthen operations and build resiliency
and more

With over 30 languages available, find your local center and connect with an advisor today.

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California Competes Tax Credit

The California Competes Tax Credit (CCTC) provides tax credits to businesses who are looking to grow across the state, relocate to California from a different state, or stay in the state.

For more information about the program’s eligibility, guidelines and application periods please click here.

You can also sign-up for more information here.

California Opportunity Zones

The California Opportunity Zones program was created as part of the Tax Cuts and Jobs Act of 2017. It is intended to be a tool for community development and investments in designated census tracts. The Internal Revenue Service (IRS) defines census tract as economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.Opportunity Zones propel new investments in the following areas: climate change, affordable housing, environmental justice and sustainability. If you are interested in knowing whether the site you are wanting to invest in for your business is in a designated Opportunity Zone, visit the state’s interactive OZ map here.

For more information about the program’s eligibility, guidelines and application requirements please click here.

You can also sign-up for more information here.

Employee Training Panel

The Employee Training Panel (ETP) provides funding to employers for training that upgrades the skills of their workers. ETP prioritizes small business training and is an essential resource for small business employers who may otherwise have no means to train their workers. About three-fourths of all businesses served by ETP employ 250 or fewer workers; and as many as one-third employ only 20 or fewer workers.

For more information on training cost reimbursements for small businesses, visit the Employment Training Panel Small Business Program.

Main Street Small Business Tax Credit

Note: The credit reservation process is closed for the Main Street Small Business Tax Credit.

For updates on this program, visit the California Department of Tax and Fee Administration (CDTFA).

The Main Street Small Business Tax Credit provides financial relief to small businesses impacted by COVID-19, and as a direct result have suffered job losses. The program is administered by the California Department of Tax and Fee Administration. Eligible small businesses may use the credit against income taxes or can also apply the credit against sales and use taxes. It is important to note that the credits are awarded on a first-come, first-served basis until the funds are depleted for the year. Small businesses who are eligible are limited to receive $100,000 in credits.

For questions regarding the hiring credit, please call the CDTFA Customer Service Center at 1-800-400-7115 (CRS:711). Customer service representatives are available Monday through Friday from 8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays.

Work Opportunity Tax Credit & Fidelity Bonding Program

Work Opportunity Tax Credit

The Work Opportunity Tax Credit promotes the hiring of individuals who consistently face significant barriers to employment. This program provides a federal tax credit to employers that hire individuals from certain target groups (e.g., veterans, ex-felons, youth, and more). In the State of California, the Employment Development Department (EDD), is the certifying agency for this program. Applications for the program are submitted online.

For more information on this program, visit Work Opportunity Tax Credit.

Questions on this program can be directed to the Work Opportunity Tax Credit Center of the Employment Development Department.

Phone: 866-593-0173, representatives are available Monday – Friday, 8:00AM to 4:00PM

Email: WOTCsupport@edd.ca.gov

Fidelity Bonding Program

The Employment Development Department also provides bondings services to help alleviate employers’ concerns with hiring ex-offenders and at-risk job applicants. The Fidelity Bonding Program provides a level of insurance for employers against possible theft and dishonest or fraudulent acts. The program is available at no cost and can be applied for through the America’s Job Center of California offices throughout the state.

For more information on this program, visit the EDD Fidelity Bonding Program Fact Sheet.

Your local America’s Job Center of California locations can be located through CareerOneStop’s online American Job Center Finder.