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Community Development Incentives

Under the G-TEDA programs, businesses and other entities located within targeted areas are eligible for a variety of local- and state-provided incentives. Examples of incentives commonly offered by local governments include subsidizing the cost of development, funding related infrastructure improvements, providing job training and technical assistance to local businesses, and/or establishing more streamlined processes for obtaining permits.

The state also offers a number of incentives, including tax credits, priority notification when selling state surplus lands, access to certain brownfield clean-up programs, and preferential treatment for state contracts.

Below is a chart comparing the state tax incentives offered to businesses located in a G-TEDA.

Comparison of State Tax Benefits by Targeted Area

  Hiring Credit

 

Longer NOL Carry- Forward Period

Sales and Use Tax Credit

Accelerated Depreciation

Lender Interest Deduction

EnterpriseZone

X

X

X

X

X

Manufacturing Enhancement Zone

X

       

Targeted Tax Area

X

X

X

X

 

Local Agency Military Base Recovery Area

X

X

X

X

 

Source:  Legislative Analyst's Office

Below is a chart summarizing total G-TEDA credits claimed in the 2004 through 2007 tax years.

Comparison of Total G-TEDA Credits Claimed in the 2004 to 2007 Tax Years

Total G-TEDA Credits per Tax Year

2004

2005

2006

2007

Number of Credits Claimed on Corporate Taxes

3,256

4,325

4,851

5,631

Value of Credits Claimed on Bank and Corporate Taxes (thousands)

$218,726

$216,416

$230,751

$251,591

Number of Credits Claimed on Personal Income Taxes

5,054

8,270

9,973

15,461

Value of Credits Claimed on Personal Income (thousands)

$130,401

$146,204

$154,926

$179,343

Source:Data Provided by the Franchise Tax Board

The Franchise Tax Board (FTB) reported that in 2007 – the most current data available – $481 million in G-TEDA credits and deductions were claimed through corporate and personal income tax returns. Additionally, FTB reports hundreds of millions in carryover credits have been earned by businesses located in G-TEDAs, but they have not been claimed. Below is a chart that displays the dollar amount of G-TEDA incentives claimed through each of the tax incentives.

Clained G-TEDA Incentives 2004 to 2007

 

2004

2005

2006

2007

Hiring and Sales Tax Credit

$349,127

$362,620

$385,677

$430,934

NOL Deductions

$72,326

$74,024

$126,106

$207,993

Tax Impact

$5,171

$5,966

$11,351

$15,807

Net Interest Deductions

$432,867

$490,129

$517,310

$520,372

Tax Impact

$29,103

$32,395

$34,156

$34,438

Business Expense Deductions

$4,387

$4,770

$4,463

$5,136

Tax Impact

$222

$200

$188

$197

Total Tax Impact

$383,624

$401,181

$431,371

$481,376

Data Provided by the Franchise Tax Board 11/9/09

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