| SALES AND USE TAX
CREDIT
Purchases of machinery and equipment used to fabricate or
manufacture a product in the Enterprise Zone are eligible
to earn an 9.25% tax credit on state income tax. (The 9.25%
is true - only if the equipment was bought in San Jose or
a city that has 9.25% sales tax rate). The exact percentage
can vary based on what city or state the purchase was made.
Corporations may claim a credit equal to the sales and use
tax paid or incurred on the first $20 million of the cost
of equipment purchased or leased. S Corporations and individuals
may claim the credit for up to $1 million in cost.
HIRING TAX CREDIT
Businesses hiring persons from one of 13
eligibility categories may claim tax credits on wages paid to those employees
for five years. The first-year hiring credit is 50% of the employees' qualified
wages.
BUSINESS EXPENSE DEDUCTION
A deduction of up to $20,000 is available for certain tangible property used exclusively in the Enterprise Zone.
NET INTEREST DEDUCTION FOR LENDERS
Lenders may receive a tax deduction on the amount of "net interest" earned
on loans made to businesses located in the Enterprise Zone.
NET OPERATING LOSS CARRYOVER
100% of net operating losses can be carried over up to 15 years to reduce the amount of taxable income levels paid in subsequent years.
INDIVIDUAL INCOME TAX CREDIT FOR QUALIFIED EMPLOYEES
Employees that work within the boundaries of an Enterprise Zone may be eligible for a credit against their personal income taxes for a portion of the qualified wages they earned (up to $10,500) in the Enterprise Zone. The credit is five percent (5%) of the qualified wage up to a maximum credit of $525.
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