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New CA 2021 Business Credit - deadline 11/30/21

Beginning November 1, 2021, California is offering a small business tax credit that can be used by qualified employers to offset income tax as well as sales and use taxes.  

California Small Businesses must meet the following requirements:

  • Employ fewer than 500 employees as of December 31, 2020
  • Have a net increase in qualified employees - details of the calculation are here
  • Experience a decrease of 20% or more in gross receipts in 2020 as compared to their 2019 gross receipts (as reported to the Franchise Tax Board).

What to do if you qualify

1. Reserve the credit via the website here before November 30, 2021

  • Be sure to have documentation available.
  • Make the election as to where to apply the credit :
      • Personal or Corporate Income Tax
      • or
      •  Sales and Use Tax
  1.  Claim the Credit of $1000 for each net increase in qualified employees (up to $150,000 per employer.)
    • FTB - claim on a timely filed (not amended) tax return for tax years beginning after January 1, 2021.  Full details are on the FTB website.  There are special limitations that apply to S Corporation filers.  Please contact us for details. 
    • Sales and Use Tax
      • Credit can be taken on the Sales and Tax return due on April 30, 2022 (for monthly and quarterly filers) and for first return due after April 30, 2022 for annual filers. 

Note: If you previously received the 2020 Main Street credit, your 2021 tentative credit may be reduced by that amount. 

Learn more on the CDTFA website here. 

Contact your tax professional if you have questions.