What is an Enterprise Zone?
There are 42 Enterprise Zones in California which were established to stimulate development in economically distressed areas. These incentives were implemented to encourage business investment and promote new jobs, thereby reviving the local economy.
What is the Enterprise Zone-Hiring Tax Credit?
The California Enterprise Zone-Hiring Tax Credit is a state income tax credit for tax paying employers in any one of the forty-two Enterprise Zones. One qualified employee can provide significant savings of $31,507 or more during the first five years of employment. Simply stated, your company may be eligible to receive a significant tax credit, and in some cases refunds, for operating in the Enterprise Zone. It's a dollar for dollar tax savings and you can carry forward unused credits into future years.
Below is a sample calculation of the hiring credit one employee can earn, using various rates of pay:
|
|
Hourly Pay / Salary |
| Year |
Credit |
$6.75/hr |
$8/hr |
$9/hr |
$10/hr |
$75,000/yearly |
| 1 |
50% |
$7,020 |
$8,320 |
$9,360 |
$9,745 |
$10,524 |
| 2 |
40% |
$5,616 |
$6,656 |
$7,488 |
$8,320 |
$8,419 |
| 3 |
30% |
$4,212 |
$4,992 |
$5,616 |
$6,240 |
$6,314 |
| 4 |
20% |
$2,808 |
$3,328 |
$3,744 |
$4,160 |
$4,209 |
| 5 |
10% |
$1,404 |
$1,664 |
$1,872 |
$2,080 |
$2,104 |
| Total |
|
$21,060 |
$24,960 |
$28,080 |
$30,545 |
$31,570 |
What type of employee qualifies?
There are thirteen different eligibility categories that cover a wide variety of individuals. Full Time, part-time and seasonal employees may qualify as well as laborers and top management. Most employers greatly underestimate the credit they are entitled to. You may have more qualified employees than you think.
How does my company qualify?
If your business is located in an Enterprise Zone, your company is entitled to take advantage of the Hiring Tax Credits, as well as other Enterprise Zone incentives. If the company employs qualified workers, and the company or the shareholders are state tax payers, these credits can be used to offset State Tax liability.
To learn more about how alliantgroup can help you with Enterprise Zone Credits, please contact Gary Buse at 949-809-2170, or click on Enterprise Zone Brochure for further information.
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