First Advantage, in conjunction with the National Employment Opportunity Network (NEON) and government relations and lobbying experts, has been continuing to work to secure a more lucrative California income tax credit for companies who hire certain categories of candidates to work in California locations. NEON is dedicated to supporting cost effective government incentives, and First Advantage, along with the other NEON Board Member companies, has been assisting in urging the CA legislature to consider such credits.
As we highlighted in a prior Tax Alert, via SB-840 California Governor Jerry Brown proposed a new tax credit, the California Hiring Credit, meant to supplement the state’s current New Employment Credit. However, both credits have gaps in targeting many hiring categories.
Through the sponsorship of Assemblymember Sharon Quirk-Silva, AB-916 has been revised to create a much broader California tax credit program for the hiring of qualified employees. On July 5, 2018, AB-916 was amended to allow for a state credit that directly utilizes the structure and processes of the federal WOTC program pursuant to Section 51 of the Internal Revenue Code. The credit amount would be equal to 40% of the qualified first-year wages paid to a qualified employee who is a member of a targeted group, as defined in federal tax law, and the bill would prohibit the credit from exceeding $2,400 per qualified employee per taxable year.
In the coming weeks, the bill will be considered by the Senate Governance and Finance Committee, amended if necessary, considered on the floor, and we are hopeful that it will be passed before the August 31st end of the current legislative session. First Advantage will continue to actively support a new, broader California income tax credit, let key legislators know the importance of the legislation and its impact on our employer clients, and keep you updated as things progress. If you have any questions on this or any other state credits, please contact your First Advantage Tax Account Manager.