Incentive Zones & Tax Credits

Local Area Military Base Recovery Act (LAMBRA)

The Local Military Base Recovery Act (LAMBRA) designation provides significant state tax advantages to firms locating on Mare Island. LAMBRA incentives were established to stimulate growth and attract reinvestment and re-employment in areas that experienced military base closures. The LAMBRA program provides business-related tax incentives similar to Enterprise Zones such as tax incentives for hiring qualified employees, credit for sales or use tax paid or incurred on qualified property, business expense deduction for the cost of qualified property and net operating loss carryover.  For more information, visit the LABMRA website.

Historically Underutilized Business (HUB) Zone

The Historically Underutilized Business (HUB) Zone Empowerment Contracting Program stimulates economic development and creates jobs in urban and rural communities by providing federal contracting preferences to small businesses. These preferences go to small businesses that obtain HUBZone certification in part by employing staff who live in a HUBZone. The company must also maintain a "principal office" in one of these specially designated areas. A principal office can be different from a company headquarters. The program resulted from provisions contained in the Small Business Reauthorization Act of 1997. The HUBZone Empowerment Contracting Program is administered by a staff in Washington, D.C. in cooperation with field staff located in SBA District Offices around the country. A full listing of those local District Office staff members, HUBZone liaisons, is available on the HUBZone web page under "Contacts."

Research and Development Tax Credit (CA Franchise Tax Board Business Tax Credits)

The California R&D Tax Credit offers a permanent tax credit for qualified research expenses incurred while conducting qualified research in California. Designed to encourage companies to increase their basic research and development activities in California, the R&D tax credit allows companies to receive a credit of 15% for qualifying in-house research expenses and 24% for basic research payments to an outside company or university. Qualifying expenses include:

  • Employees’ wages for researchers, supervisors and support services
  • Supplies used in conducting the research
  • Amounts paid to outside consultants for the right to use personal property for research

 For more information please download the Research and Development Tax Credit Frequently Asked Questions brochure.

California Alternative Energy & Advanced Transportation Authority (CAEATFA)

California Alternative Energy & Advanced Transportation Authority (CAEATFA) provides eligible projects financial assistance in the form of a sales and use tax exclusion on property used for the "design, manufacture, production, or assembly" of either advanced transportation technologies or alternative energy source products, components or system.. Businesses must apply for the tax exemption and receive approval through the CAEATFA Board. This program will sunset in 2020. More information and applications are available at CAEATFA website.

New Jobs Tax Credits

A temporary incentive, this credit is for small businesses that create new jobs. Employers that began the year with 20 or fewer employees could claim a $3,000 credit for each full-time employee hired. California allocated $400,000,000 for this tax credit. Taxpayers may only claim the credit on an original timely filed return received by the FTB on or before a cut-off date specified by FTB. The cut-off date is the last day of the calendar quarter within which FTB estimates it will have received timely filed original returns claiming the credit that cumulatively total $400 million.

For more information regarding the New Jobs Credit please visit the FTB website.

New Markets Tax Credits

The New Markets Tax Credit Program (NMTC Program) was established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. The NMTC Program attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities (CDEs). The credit totals 39 percent of the original investment amount and is claimed over a period of seven years (five percent for each of the first three years, and six percent for each of the remaining four years). The investment in the CDE cannot be redeemed before the end of the seven-year period.

 More information is available on the U.S. Treasury site.

Historic Tax Credits

Since 1976, the Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings. It creates jobs and is one of the nation's most successful and cost-effective community revitalization programs.  The National Park Service and the Internal Revenue Service administer the program in partnership with State Historic Preservation Offices.  The program offers two different tax credits:

20% Tax Credit – available for the rehabilitation of historic, income-producing buildings that are determined by the Secretary of the Interior, through the National Park Service, to be “certified historic structures.”  The Internal Revenue Service defines qualified rehabilitation expenses on which the credit may be taken. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit.

10% Tax Credit - available for the rehabilitation of non-historic buildings placed in service before 1936. The building must be rehabilitated for non-residential use. In order to qualify for the tax credit, the rehabilitation must meet three criteria: at least 50% of the existing external walls must remain in place as external walls, at least 75% of the existing external walls must remain in place as either external or internal walls, and at least 75% of the internal structural framework must remain in place. There is no formal review process for rehabilitations of non-historic buildings.