Los Angeles Enterprise Zone Tax Credits

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Los Angeles Enterprise Zone Tax Credits

The City of Los Angeles has two Enterprise Zones. The Los Angeles Enterprise Zone was designated on October 15, 2006, and is valid through October 15, 2021. In addition, the East Los Angeles Enterprise zone designation was renewed on January 11, 2008, and is valid through January 11, 2023. An expansion of the Los Angeles Enterprise Zone, the Hollywood Enterprise Zone, was approved on May 10, 2010, and includes the Warner Center portion of Woodland Hills; the Canoga Park, Chatsworth and Northridge industrial areas; the area surrounding Van Nuys Airport; and Van Nuys Boulevard from Saticoy Street to Oxnard Street in Van Nuys. On May 18, 2010, the State of California approved additional expansion to include the areas surrounding LAX; portions of San Fernando Road and Foothill Boulevard in Sylmar; and Washington Boulevard and Glendale Boulevard in Echo Park.

Hiring Credits

A Tax credit of up to $37,440 over a 5-year period per each qualified employee can be claimed by an business located in the Hollywood Enterprise Zone. An employee can qualify under any one of 13 different categories.

Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit (WOTC). Any business anywhere can qualify for the credits as long as they hire persons between the ages of 18-39 who reside in either the Federal Empowerment Zone (EZ) or the Federal Renewal Community (RC) area. Los Angeles contains both an EZ and an RC. There are eight (8) additional eligibility categories, some of which are not dependent on the employee’s address. The WOTC hiring credit is worth up to $2,400 per year for each eligible hire.

How do I know if my business qualifies?
» To see if your business qualifies, fill out the Enterprise Zone eligibility form

Other benefits of the Hollywood Enterprise Zone includes:

Sales and Use Tax Credits
An Enterprise Zone business can receive a tax credit of 100% of the sales/use tax paid for equipment purchases for use in the zone. Machinery, machinery parts, telecommunications equipment and office equipment such as copiers, printers, fax machines and telephone systems also qualify.

Business Expense Deduction
An accelerated depreciation is available for tangible personal property the first year it is placed in service in an Enterprise Zone. Office supplies and inventory do not qualify. Limits: $20,000.

Net Interest Deduction
Lenders can earn tax-free interest on loans made to Enterprise Zone businesses.

Net Operating Loss Carryover
100% of Net Operating Losses may be carried forward for 15 years to reduce the amount of taxable income for those years.