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Salinas Valley Enterprise Zone Expanded!
On July 11, 2011, the State Department of Housing and Community Development approved an application by the Salinas Valley Enterprise Zone to expand by 312 acres to include the Castroville Industrial Park. The expansion includes those businesses in the industrially-zoned area of eastern Castroville and includes portions of Blackie Road, Commercial Parkway, Cara Mia Parkway, Castro Street, Wood Street, and Del Monte Avenue (for a map of the area, please click here). Businesses located between Salinas and Castroville along Highway 183 have also been included. Approximately 58 businesses are currently located in the area.
Salinas Valley Enterprise Zone Benefits
Businesses located within the Enterprise Zone may receive significant tax benefits for a number of normal business activities. These benefits can be used to reduce or eliminate the business' California Income Tax liability and include:
- Hiring Credits. The Hiring Credit may be worth up to $37,440 per employee over a five year period. In order to claim this credit, your business must be located within the Enterprise Zone. A qualified employee is defined as an employee with a start date after July 11, 2011 that meets certain eligibility criteria.
- Sales & Use Tax Credit. This credit allows business to offset the sales and use tax paid on the purchase of qualified property. The credit may be used for qualified property purchases of up to $1M for individuals, estates and partnerships. The credit may also be used for qualified property purchases of up to $20M for corporations (excluding S-Corps). Qualified property is defined as any equipment that was purchased after July 11, 2011 and placed into service before January 29, 2024. Limited examples of qualified property include; computers, telephones, fax machines, cameras, audio recorders and any equipment (or parts) used in the fabrication, production and process of new products.
- Business Expense Deduction. This deduction allows a business to treat 40% of the cost of qualified property as a business expense, rather than a capital expense. This means a business may purchase equipment and rather than classify it all as a capital expense, they can treat 40% of the cost and recognize it as a business expense. This allows the business to recognize the deduction for that portion of the cost to be taken immediately. The balance of the cost would be depreciated normally beginning in the following year. The Business Expense Deduction can only be used in the year the property is placed into service.
- State Contract Bid Preferences. Businesses located within the Enterprise Zone may receive a 5% bid preference on certain state contracts. In addition, businesses may receive additional bid preferences if they agree to retain a specific % of labor from the Enterprise Zone.
Contact Us
There are several opportunities for businesses operating in the Enterprise Zone. It is important to understand how these benefits apply to your company for current and future year tax planning. For additional information on how your business can receive these benefits click here to contact us. In a brief conversation our Salinas Valley Enterprise Zone team can assess your situation and determine the best way to move forward based on your situation.
