Extension of the California Competes Grant Program (CCGP) and California Compete Tax Credit (CCCT)
Governor Newsom extended the California Competes Grant Program (CCGP) and California Compete Tax Credit (CCTC) in the proposed state budget for Fiscal Year 2022/2023. There are still two application windows left this fiscal year for the tax credit program. However, the award application period ended (July 25–August 15, 2022).
Overview of the California Competes Tax Benefit
The California Competes Tax Benefit is an income tax credit for companies wishing to relocate to, expand within, or remain in California. Any business, regardless of industry, size, or location, may apply. The program aims to attract high-value companies that pay their workers well and offer benefits in sectors with strong economic multipliers.
Eligibility and purpose of the program
The California Governor’s Office of Business and Economic Development, or GO-Biz, is required to take into account how much the credit will affect a company’s capability, willingness, or both of those factors to create new, full-time jobs in this state that the taxpayer or any other taxpayer might not otherwise develop.
The application process takes about 90 days, which includes the time it takes to analyze each application and present it for approval to the California Competes Tax Credit Committee. Throughout the year, there are three application windows.
The following times are when GO-Biz will accept applications for the California Competes Tax Credit for the fiscal year 2022-2023:
- ($85 million in tax credits and $120 million in grants are available from July 25 through August 15, 2022)
- January 3 to January 23, 2023 ($120 million in available tax credits)
- March 6 – March 20, 2023 ($99.7 million + any lingering funds from prior application periods that remain unallocated)
The procedure is divided into two stages:
Phase I: Quantitative Examination
Phase I*: A quantitative examination in which the requested credit amount is contrasted with each applicant’s hiring and investment pledges. This “ratio” is determined by subtracting the applicant’s credit request from its investments plus total employee salaries.
Phase II: Qualitative Assessment
Phase II: An assessment of a range of quantitative and qualitative factors, such as local unemployment and poverty, rival incentives, economic impact, strategic importance, industry outlook, and the extent to which the applicant can show that the credit will significantly influence its choice to create new, high-quality full-time jobs in California.
An application will be advanced immediately to Phase II by GO-Biz if:
The applicant’s owner, president, chief executive officer, chief financial officer, or another equivalent representative attests to GO-Biz that, if the credit is not granted, the applicant’s project may or will take place in another state and that the applicant may or will fire or transfer all or some of its employees to that state.
A company declares in the Proposed Project section that at least 75% of the net increase in the applicant proposed by the applicant will work at least 75% of the time in a region with a high unemployment rate or a high level of poverty.
CCGP and CCTC were extended for Fiscal Year 2022/2023 by Governor Newsom. A total of $120 million in business tax credits and grants are available through the CalCompetes program, open to any business wishing to relocate to, expand within, or remain in California. The program aims to attract high-value companies that pay their workers well and offer benefits in sectors with strong economic multipliers.