With its 2012 designation, the Anaheim Enterprise Zone program offers the potential to provide millions in savings to local businesses, create thousands of jobs, and revitalize local neighborhoods, assist with decreasing unemployment and make Anaheim an even more attractive place to do business.
Qualified businesses may take advantage of all available Enterprise Zone credits, if applicable. Businesses are not limited to just one.
Hiring Tax Credits
View a Hiring Tax Credit formula example here.
Business located in the Anaheim Enterprise Zone may reduce their State Income Tax by a percentage of the wages paid to one or more qualified employees. A business has the potential of earning $37,440 in tax credits per qualifying employee over a five-year period. Click here for a list of critera for "qualified employees."
If a business hires a qualified full-time employee, working 2080 hours
at $12.00 per hour*, the hiring tax credit would generate a tax savings of up to $37,440 per employee, over a five-year period.
There are many ways for employees to qualify including: individuals who live in targeted employment areas or individuals who have been recently laid-off to name just a few. The tax credit is retroactive to employees hired after the Anaheim Enterprise Zone designation date of February 1, 2012, and excess credits can be carried forward to offset future tax obligations.
Please Note: A business may or may not be able to make full use of a Hiring Credit of other benefits of the Anaheim Enterprise Zone program. We recommend that you contact your tax consultant for further information.
* $12.00 IS THE CREDIT CAP VALUE (150% X CURRENT MINIMUM WAGE, $8.00).
A BUSINESS CAN PAY MORE OR LESS THAN THE CAP, BUT ONLY RECEIVE THE CREDIT FOR THE ACTUAL WAGES PAID TO A MAXIMUM OF $12.00 PER HOUR.
Sales and Use Tax Credit
Businesses may be able to claim a state tax credit equal to the sales and use tax paid on qualified equipment purchased and used in the Enterprise Zone on or after February 1, 2012. Qualified equipment or machinery parts purchased for exclusive use in the Enterprise Zone include assets such as manufacturing, data processing, office, audio/video, and computer equipment. In any year, individuals may be able to claim a credit on the first $1,000,000 of qualifying purchases. Corporations may be able to claim credits on up to $20,000,000 per year.
Business Expense Deduction
Businesses may be able to deduct up to $40,000, depending on the year purchased, of the cost of business equipment, furnishings, and fixtures as well as other depreciable personal property used in the Enterprise Zone as a business expense. The remaining value of the purchased item can be depreciated in following years under generally accepted accounting practices.
Net Operating Loss Carryover
Businesses or individuals in the Enterprise Zone who show a net operating loss may be able to carry that loss forward for up to 15 years to reduce future tax liability. Minimum taxes still apply.
Net Interest Deductions for Lenders
A bank or individual making a loan to a business whose sole activity takes place in the Enterprise Zone may deduct direct expenses incurred in making the loan from the interest income. The lender may also take a deduction equivalent to the net interest produced by the loan. The lender may not have an equity interest in the business.
As a borrower, this could mean more favorable rates or terms on a business loan. Be sure to find out if your bank participates in the Net Interest Deductions available to participating Enterprise Zone businesses.
Income Tax Credit for Employees
Qualified employees working in the Enterprise Zone may qualify to claim state tax credits on their personal income tax.
Please refer to the Franchise Tax Board's Enterprise Zone Guidelines (PDF File) or contact your tax advisor for more information.
For more information please contact the Franchise Tax Board/Enterprise Zone Hot Line at (916) 845-3464.
The Anaheim Enterprise Zone office will be happy to answer any questions that you may have or direct you to the proper office.