The Small Business Tax Credit was established through the enactment of SB 1447 (Bradford) in September 2020.
Assemblywoman Rivas was proud to vote for this bill when it came before her on the Assembly floor because she understands the tremendous impact the pandemic has had on our small business community.
How the Credit Works
Credit Reservations Are Required: To receive a tax credit tentative reservation, qualifying small businesses need to apply to the California Department of Tax and Fee Administration (CDTFA) between December 1, 2020, and January 15, 2021. Reservations will be accepted on a first-come-first-serve basis. The CDTFA has authority to accept up to $100 million in tax credits.
An eligible small business can receive $1,000 in credit for each net new hire that occurred during the second half of 2020, up to $100,000 per business. This tax credit can be used against personal and
corporate income tax liabilities OR sales and use tax liabilities from the 2020 tax year. This is an important point, as other tax credits are not as flexible.
1. The small business must have employed 100 or fewer employees as of December 2019 (this figure is for all employees, including part-time employees);
2. The small business has experienced a 50% decrease in gross receipts in the second quarter of 2020 (April 2020 through June 2020) compared to the second quarter of 2019 (April 2019 through June 2019);
3. The small business had a net increase in employment between July 2020 through November 2020, compared to the prior quarter (April 2020 through June 2020); and
4. The small business applied for a tax credit registration between December 1, 2020, and January 15, 2021, with the California Department of Tax & Fee Administration.
Technical Assistance Links:
CDTFA webpage, including a FAQ: https://www.cdtfa.ca.gov/taxes-and-fees/SB1447-tax-credit.htm
FTB webpage: https://www.ftb.ca.gov/file/business/credits/small-business-hiring-credit.html
Please don’t hesitate to reach out to our office if we can be of assistance to you on state-related issues. Be safe and well.
Arturo Garcia-Mendoza, Field Representative
Office of Assemblywoman Luz Rivas
9300 Laurel Canyon Blvd. 1st Floor
Arleta, CA 91331
Phone: (818) 504-3911
Email: [email protected]