With millions of Californians out of work, on Wednesday, September 9, Gov. Gavin Newsom signed a law giving tax breaks to small businesses that hire employees over the next three months.
The incentive program will offer businesses of 100 employees or less a tax credit of $1,000 on their state tax bills for each new employee hired by December 1, 2020. The credit only applies to businesses that have lost at least 50% of their revenue from April to June 2020, compared to the same time period in 2019. The credit is capped at $100 million statewide, or $100,000 for each business. Businesses get the credit only if they hire employees; not contractors. Furthermore, small businesses that are owned by large companies are not eligible for the credit.
California’s economy has been devastated by the Coronavirus pandemic as the Newsom administration ordered many businesses to close for months to slow the spread of the virus. California lost 2.4 million jobs in April; more than all the jobs lost during the Great Recession a decade ago. The state has added back nearly a third of those jobs since then, but the unemployment rate is still 13.3% — higher than it ever got during the Great Recession. As of Tuesday, the state lists 33 of the state’s 58 counties as the most at risk for the Coronavirus, a designation that requires many businesses to halt indoor operations.
