California State Tax Credits

More ways to save your hard-earned money from the tax man!

California has some great Tax credits for you....

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap

 
California

California College Access Tax Credit (CATC)

Overview:
The College Access Tax Credit allows individuals and businesses to receive a 50% state tax credit for donations made to the California College Access Tax Credit Fund. These donations directly support Cal Grants, helping low-income students afford college. Plus, donors can also claim a federal charitable contribution deduction on the same donation, boosting overall tax savings.

Who It’s For:
California taxpayers—including individuals, corporations, and pass-through entities—looking to reduce their state tax burden while supporting college access for underserved students.

Four Key Highlights:

  1. Massive 50% State Tax Credit

    • Donate to the College Access Tax Credit Fund and receive a 50% credit against your California income or franchise tax.

  2. Double Benefit with Federal Deduction

    • You can also claim your donation as a federal charitable deduction, further increasing your tax savings.

  3. Supports Cal Grant Recipients

    • Your contribution helps low-income California students attend college by funding need-based grants through the Cal Grant Program.

  4. Simple Application & Donation Process

    • Apply through the California Educational Facilities Authority (CEFA) at ftb.ca.gov College Access Tax Credit.

    • Donation confirmation and a credit certificate are provided for tax filing.

CHECK IT OUT NOW

California New Employment Credit (NEC)

Overview:
The California New Employment Credit (NEC) offers a significant income tax incentive for businesses that hire qualified full-time employees in designated areas (DGAs). It targets employers committed to job creation, especially those hiring individuals facing barriers to employment, with expanded industry eligibility under recent legislation.

Who It’s For:
California employers operating within a Designated Geographical Area (DGA) who plan to expand their workforce by hiring eligible full-time employees and can demonstrate a net job increase.

Four Key Highlights:

  1. Substantial Credit for Hiring Qualified Employees

    • Employers receive a credit worth 35% of qualified wages (wages between 150% and 350% of California’s minimum wage) for each eligible new full-time employee.

  2. Strict Eligibility and Reservation Requirements

    • Must obtain a Tentative Credit Reservation (TCR) for each new hire within 30 days of filing the EDD New Hire Report.

    • Qualified employees must meet specific hiring criteria (e.g., unemployed 6+ months, veteran, EIC recipient, ex-offender, CalWORKs recipient).

  3. Expanded Eligible Industries as of SB 131

    • New industries include semiconductor manufacturing, electric airplane production (eVTOL), lithium production, and lithium battery manufacturing.

  4. Limitations and Exclusions Apply

    • Certain industries like retail, food service, and temporary staffing agencies are excluded unless the business qualifies as a small business (less than $2M gross receipts).

    • Credits must be reported on a timely filed original return and cannot be claimed without a net full-time employee increase.

 

Check it out now

California Competes Tax Credit (CalCompetes)

Overview:
The California Competes Tax Credit offers businesses across all industries a chance to earn state income tax credits in exchange for committing to locate, expand, or stay in California while creating quality full-time jobs. The program is highly competitive and prioritizes businesses that can demonstrate strong economic impact, especially in high-unemployment or high-poverty areas.

Who It’s For:
Businesses of any size or industry planning to expand operations and create full-time jobs in California, particularly those that can show the tax credit would influence their decision to grow within the state.

Four Key Highlights:

  1. Wide Eligibility but Competitive Application Process

    • Open to all industries statewide, with small businesses strongly encouraged to apply.

    • Requires a detailed Proposed Project narrative explaining how the credit impacts hiring and investment.

  2. Focus on High-Impact Job Creation

    • Priority given to businesses offering higher wages, strong benefits, and investing in high-poverty or high-unemployment areas.

    • Minimum full-time employment (35+ hours/week) requirement—part-time work does not qualify.

  3. Non-Refundable Credit with Five-Year Carryforward

    • Credits offset California income taxes and can be carried forward up to five years if unused.

    • S corporations use one-third of the credit at the entity level, passing the rest to shareholders.

  4. Structured Two-Phase Evaluation

    • Phase I: Initial ranking based on a formula evaluating credit request vs. job/investment commitment.

    • Phase II: Qualitative review assessing broader economic impacts, with advantages for businesses moving jobs from out-of-state or hiring heavily in disadvantaged areas.

CHECK IT OUT NOW