Multistate Tax Alert: California AB 93 Eliminates Current Enterprise Zone Program
Creates new economic development incentives and a partial sales tax exemption for manufacturers
The California Legislature has passed Assembly Bill (“AB”) 93, which phases out and replaces California Enterprise Zone (“EZ”) tax credits with a new economic development program comprised of a hiring tax credit, a statewide partial sales and use tax manufacturing exemption, and incentive fund.1 AB 93 reflects many of the changes publicly advocated by Governor Brown, and is anticipated to become law. California’s current EZ program offers income tax credits to taxpayers located within specific geographic areas called EZ’s. Under AB 93, the EZ incentives will be repealed as of January 1, 2014 and replaced by three new incentives.2 This Tax Alert provides a summary of AB 93 and the new incentives, information on the treatment of EZ credits, both currently generated and carry-forward tax credits, and addresses other possible taxpayer considerations.
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1 AB 93 (enrolled July 3, 2013) 2013-14 Leg., (Cal. 2013). The Legislature also passed Senate Bill (“SB”) 90 (enrolled July 3, 2013) 2013-14 Leg., (Cal. 2013). SB 90 modifies some provisions of AB 93. This Tax Alert will incorporate the changes made by SB 90 into the discussion of AB 93.
2 AB 93 also phases out and ends on December 31, 2013, the current “new jobs credit” in California, as well as California credits associated with Loc