Tax Credits and Hiring Incentives
Richmond enables businesses to save thousands – even millions – of dollars through a variety of tax credits and cost reductions.
Targeted Employment Area Tax Credits
Businesses hiring a resident from a state-recognized Targeted Employment Area (TEA) can immediately qualify for these benefits. TEA credits are available for hires in several Richmond neighborhoods.
- Hiring Tax Credit: Richmond businesses that hire prior to January 1, 2014 may reduce state income tax by a percentage of wages paid to one or more qualified employees.
- Sales & Use Tax Credit: Corporations may earn sales tax credits on purchases of up to $20 million per year on qualified machinery or machinery parts used in the TEA. Partnerships and individuals may annually claim a credit on the first $1 million of qualifying purchases
- Business Expense Deductions: A business may deduct up to $20,000 of the cost of qualifying business equipment, furniture and fixtures or other depreciable personal property.
- Net Operating Loss Carryover: Businesses may carry forward up to 100% of Net Operating Loss for 15 years.
- Interest Deduction for Lenders: Lenders to TEA businesses may deduct direct expenses incurred in making the loan from the interest income, which may translate into more favorable rates or terms for the borrower.
- Former Enterprise Zone Program Participants: Participants may continue using Enterprise Zone carryover credits for 10 years and continue to earn hiring credits for employees hired prior to January 1, 2014.
More Tax Credits
- On-the-Job Training (OJT): Businesses may be reimbursed up to 50% of the wages paid to a new hire during the initial training period (up to 6 months). OJT focuses on jobs involving new technologies, production and services. For more, contact Business Services at 510-307-8014.
- Specialized Hiring Credits: Businesses that hire long-term unemployed workers, veterans with 12 months separation from service, people receiving federal earned-income tax credit, ex-offenders and recipients of CalWORKS or general assistance may receive credits for up to five years. Credits are only allowed for a net increase in jobs for hires between January 1, 2013 and January 1, 2021.
- Manufacturing Equipment Sales Tax Exemption: Businesses engaged in manufacturing or biotechnology research may exclude the first $200 million in equipment purchases for the state share of sales tax (4.19%) beginning July 1, 2014.