California · Economic Development · CA-COMP-001
California Competes Tax Credit
Publication revised September 24, 2026. Sourcebook page 46.
Credit amount / calculation
Negotiated award through competitive application cycles.
Business fit and eligible activity
An expanding mill or wood manufacturer can compete for a negotiated income-tax credit based on jobs, investment and strategic value. Qualified investment or approved project activity; confirm eligible property, location and taxpayer type.
Eligibility and practical use
California Competes is a negotiated credit for businesses locating or expanding in California. A mill must present a competitive project and meet the investment and employment commitments in its agreement. The award is allocated across five tax years, not paid automatically when equipment is purchased. Page
Illustrative business benefit
Assume an executed agreement awards $100,000 over five years in equal installments. That is $20,000 per year, not a $100,000 first-year reduction. This is an assumed negotiated award, not a percentage earned automatically on the project budget.
Timing / first action
Seek approval before starting the overall project, including site work or construction. Contact the administering agency and secure the required approval before the project is publicly or contractually committed.
Official sources
- business.ca.gov — California Competes (business.ca.gov)
Related programs
California Research Credit
15% of qualified expenses above the base
Qualified California research by a wood-products manufacturer may produce a state credit.
New Employment Credit
35% of qualified wages within the statutory wage band
Qualifying hires in designated geographic areas can generate credits when reservations are timely.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Clean Electricity Production Credit (Internal Revenue Code §45Y)
Production-based
Alternative to the investment credit for owners/operators of qualifying clean-electricity facilities; potentially relevant to qualifying on-site generation.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.