The state of California recently announced the renewal of its California Competes Tax Credit Program (CCTC) for the 2025–2026 fiscal year. The next application period opens on January 6 and runs through January 27. There is a total allocation of $215 million. This is a highly competitive incentive program, and less than a dozen companies are approved during each application cycle. It includes a rigorous 12-point review system and the ability to clearly demonstrate the overall community impact of the project.

The CCTC is designed to stimulate economic development by providing financial incentives to businesses that are expanding or relocating to California. Below is a summary of the program.

What is the California Competes Tax Credit Program?

The California Competes Tax Credit Program is a state-run initiative aimed at encouraging businesses to create jobs and invest in California. The program offers tax credits and grants to businesses that meet specific criteria, such as job creation, investment in infrastructure, and overall economic impact. The goal is to attract and retain high-value businesses that contribute to the state's economic growth.

Benefits of the Program

1. Tax Credits – Businesses can receive tax credits that reduce their state income tax liability. These credits are awarded based on the number of jobs created, the amount of investment and the overall economic impact of the business.
2. Grants – In addition to tax credits, the program also offers grants to businesses that meet certain criteria. These grants can be used for a variety of purposes, including infrastructure development, employee training and other business-related expenses.
3. Job Creation – One of the primary goals of the program is to create jobs in California. Businesses that participate in the program are required to meet specific job creation targets, which helps to boost employment in the state.
4. Economic Growth – By attracting and retaining businesses, the program helps to stimulate economic growth in California. This, in turn, leads to increased tax revenues, improved infrastructure, and a higher standard of living for residents.

Application Process

The application process for the California Competes Tax Credit and Grant Program is competitive and involves several steps:

1. Pre-Application – Businesses must first submit a pre-application to determine their eligibility for the program. This includes providing information about the business, its plans for expansion or relocation, and the expected economic impact.
2. Full Application – If the pre-application is approved, businesses are invited to submit a full application. This includes detailed information about the business, its financials, and its plans for job creation and investment.
3. Evaluation – Applications are evaluated based on a variety of factors, including the number of jobs created, the amount of investment, and the overall economic impact of the business.
4. Award – Successful applicants are awarded tax credits or grants based on their performance and the overall impact of their business on the state's economy.

Key Dates for the Next Round of Applications

The next round of applications for the California Competes Tax Credit and Grant Program is set to open on January 6, 2025. Businesses interested in applying should mark their calendars and begin preparing their applications as soon as possible. The application window will close on January 27, 2025, giving businesses a three-week period to submit their applications.

How Alvarez & Marsal Can Help

Navigating the complexities of the California Competes Tax Credit and Grant Program can be challenging. Alvarez & Marsal (A&M) offers expert guidance to help businesses successfully apply for and maximize the benefits of this program. Our team of experienced professionals can assist with every step of the application process, from pre-application to final award. We provide strategic advice on how to meet the program's criteria, optimize your application, and ensure compliance with all requirements. Partnering with A&M can significantly enhance your chances of securing these valuable incentives and driving your business growth in California.

For more information about this incentive, please contact an A&M representative. You can subscribe to our Tax Compass Credits and Incentives blog here.