California · Jobs / Geographic · CA-NEC-001
New Employment Credit
Publication revised September 24, 2026. Sourcebook page 49.
Credit amount / calculation
35% of qualified wages within the statutory wage band, multiplied by the applicable net-employment-growth percentage.
Business fit and eligible activity
Qualifying hires in designated geographic areas can generate credits when reservations are timely. Hiring, wages or qualifying training; where the program also requires investment, satisfy both tests.
Eligibility and practical use
This is a wage credit, not an equipment credit. Qualified wages may continue for 60 months after the original hire, provided program requirements are met.
Illustrative business benefit
Assume a qualifying worker has $10,000 of wages within the creditable band and the employer has enough net growth for a 100% applicable percentage. The credit is $10,000 x 35% = $3,500. A 50% applicable percentage would reduce it to $1,750.
Timing / first action
Request the tentative credit reservation within 30 days after completing the required new-hire report; check the designated area and employee category.
Official sources
Related programs
California Competes Tax Credit
Negotiated award through competitive application cycles
An expanding mill or wood manufacturer can compete for a negotiated income-tax credit based on jobs, investment and strategic value.
California Research Credit
15% of qualified expenses above the base
Qualified California research by a wood-products manufacturer may produce a state credit.
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.