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ANTELOPE VALLEY ENTERPRISE ZONE
- The Enterprise Zone is a California Income Tax Incentive Program.
- Covers approximately 61 square miles and encompasses industrial and commercial property in Palmdale, Lancaster and unincorporated Los Angeles County.
- Carries refund potential for companies currently residing in the zone and reduced or eliminated state income tax opportunities prospectively for businesses located in the zone.
- Five different tax incentives available:
1. Hiring Credit A business may save up to $37,444, per employee, in state income taxes, over five years; 2. Sales and Use Tax Credit On the purchase of up to $1 million of qualified manufacturing equipment, corporations up to $20 million; 3. Business Expense Deduction Partial cost of certain property may be deducted immediately as a business expense; 4. Net Interest Deduction for Lenders A deduction from income on loans made to a trade or business in the zone. 5. Net Operating Loss Carryover Individual or corporations that show a net operating loss from doing business within the Zone may be able to carry that loss over to future years to reduce future tax liability.
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Hiring
Vouchers
Issued |
|
Average
Hourly
Wage |
|
Number of
Participating
Employers |
|
Potential
Savings Over
5 Years |
| 2000 |
784 |
|
$9.04 |
|
48 |
|
$21,084,896 |
| 2001 |
953 |
|
$11.52 |
|
67 |
|
$27,860,002 |
| 2002 |
888 |
|
$7.71 |
|
68 |
|
$28,037,712 |
| 2003 |
2,041 |
|
$9.46 |
|
120 |
|
$64,442,534 |
| 2004 |
326 |
|
$10.57 |
|
43 |
|
$10,293,124 |
| 2005 |
1,044 |
|
$9.90 |
|
128 |
|
$32,963,256 |
| 2006 |
1,783 |
|
$9.71 |
|
176 |
|
$56,296,442 |
| 2007 |
1,371 |
|
$9.77 |
|
185 |
|
$48,122,100 |
| 2008 |
1,454 |
|
$12.33 |
|
152 |
|
$54,437,760 |
| 2009 |
1,620 |
|
$11.08 |
|
169 |
|
$60,652,800 |
| Total |
13,679 |
|
N/A |
|
1,286 |
|
$441,168,152 |
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The chart illustrates the actual number of AV Employers utilizing the Enterprise Zone hiring benefits since 2000 demonstrating the potential savings. There are a number of EZ tax benefits companies could be using other than the hiring tax credit that we are not able to track.
| MANUFACTURING BUSINESS WITH 10 EMPLOYEES |
| Yr. |
Sales & Use Tax Credit |
Hiring Credit |
Cumulative Total |
| Year 1 (2010) |
$4,625 |
$124,800 |
$129,425 |
| Year 2 (2011) |
|
$99,840 |
$229,265 |
| Year 3 (2012) |
|
$74,880 |
$304,145 |
| Year 4 (2013) |
|
$49,920 |
$354,065 |
| Year 5 (2014) |
|
$24,960 |
$379,025 |
Assumptions: Company is a corporation. Qualifying equipment purchased. Ten eligible full-time employees hired 1st year. Maximum 2008 hiring benefit applied ($12/hr.) Sales tax rate is 8.25%
| MANUFACTURING BUSINESS WITH 100 EMPLOYEES |
| |
Sales & Use Tax Credit |
Hiring Credit |
Cumulative Total |
| Year 1 (2010) |
$185,000 |
$936,000 |
$1,121,000 |
| Year 2 (2011) |
$92,500 |
$1,060,800 |
$2,274,300 |
| Year 3 (2012) |
|
$811,200 |
$3,085,500 |
| Year 4 (2013) |
|
$561,600 |
$3,647,100 |
| Year 5 (2014) |
|
$312,000 |
$3,959,100 |
| Year 6 (2015) |
Potential Carryover |
$62,400 |
$4,021,500 |
Assumptions: Company is a corporation. Qualifying equipment purchased 1st year is $2 million. Qualifying equipment purchased 2nd year is $1 million. 75 eligible full-time employees hired 1st year, 25 eligible full-time employees hired 2nd year. Maximum 2008 hiring benefit applied ($12/hr.). Sales Tax rate is 9.75%. This example is intended as an illustration of the potential savings to businesses located within the Enterprise Zone. It is recommended that you obtain professional advice to determine the potential benefits.
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