Pursuant to recently enacted Assembly Bill (AB) 93 and Senate Bill (SB) 90, all Enterprise Zones will end January 1, 2014. Santa Ana, will still be able to process vouchers until December 31, 2014 for employees that were hired on or before December 31, 2013. All other incentives will end on January 1, 2014.
To see if you are located in the EZ look in the EZ address range.
Enterprise Zone Tax Incentives Include:
A qualified business may reduce its state income tax by $37,440 per qualified employee, over a 5-year period. The credits may be carried over until they are exhausted.
The EZ Voucher Application fee is as follows:
Voucher fee: $100 per application
Retro-Voucher fee (application sent in 12 months after hire date): $120 per application
Expedited fee: $30 additional per application
Credit calculation, forms, and qualifying criteria can be found here.
If you are a first time user of the Enterprise Zone (EZ), we recommend you schedule an appointment with one of our EZ staff to review the process. Even though the program is easy to use, we’ve found that a few minutes of personal instruction is time well spent. To schedule an appointment please call (714) 647-6561.
Sales or Use Tax Credit
California income or franchise tax may be reduced by the amount of sales or use tax paid on certain machinery, machinery parts, and equipment purchased for exclusive use in an Enterprise Zone.
Eligible property includes machinery and machinery parts used for fabricating and processing, air and water pollution control equipment and, as of a business' 1998 tax year, data processing and communications equipment (computers, CAD systems, copy machines, telephone systems and faxes), and certain motion picture manufacturing equipment.
$1.45 million or more per year in tax credits is available for qualifying property. The credits may be carried over until they are exhausted.
Example:You spend $50,000 to purchase machinery used to manufacture wooden toys. The sales tax paid for the purchase is $3,000. You may reduce the amount of your tax imposed on Enterprise Zone income by up to $3,000.
Business Expense Deduction
Part of the cost of certain property purchased for exclusive use in the Enterprise Zone may be deducted as a business expense in the first year it is placed in service. (Amount of deduction changes annually, call for current value.)
Example:Three years after the Enterprise Zone you are located in was designated, you purchased a baking oven that costs $20,000. You can depreciate the oven over a 10-year period using the straight-line method. The Enterprise Zone Business Expense Deduction you may claim is $8,000 ($20,000 x 40%). You may claim $1,333 of normal depreciation next year, ($20,000 - $8,000) ÷ 9 years = $1,333.
Net Interest Deduction for Lenders
A deduction from income is allowed on the amount of "net interest" earned on loans made to a trade or business located exclusively in the Enterprise Zone.
Example:You loan $5,000 to an Enterprise Zone business that meets the requirements listed above. You earn $550 of interest and incur $300 of expenses directly related to the loan. You may deduct $250 ($550-$300) of net interest from your taxable income.
If you are interested in learning more about the Santa Ana Enterprise Zone, please contact the Economic Development Division