California Governor Jerry Brown’s recent 2018-2019 budget proposal includes a new credit called the California Hiring Credit (“CHC”). The CHC is meant to supplement the existing, but underutilized and underperforming, New Employment Credit (“NEC”), which previously replaced the state’s Enterprise Zone Credit effective 2014-2020.
Under the proposal, the NEC will continue to exist unmodified, but would be accompanied by the new CHC for tax years 2019-2024. The CHC includes many improvements to the existing credit landscape: it would not limit the credit geographically, it would not require annual certification with the Franchise Tax Board, it would expand qualifying businesses to include restaurants and retailers, and it would lower the wage floor requirement from 150% of the minimum wage to 100% of the minimum wage.
Clearly, the CHC would apply to more companies and more jobs, however, “eligible” jobs in the CHC are still only full-time positions and certain businesses still do not qualify such as temporary help agencies and casinos.
First Advantage, in conjunction with National Employment Opportunity Network (NEON), will be reviewing the proposed CHC, and communicating the importance of promoting the interest of California employers. If you have any questions on the CHC or any other state credits, please contact your First Advantage Tax Account Manager. As always, we will keep you updated as things progress.