California · research and development · CA-RD-001
California Research Credit
Publication revised September 24, 2026. Sourcebook page 48.
Credit amount / calculation
Regular method: 15% of qualified expenses above the base, plus a corporate basic-research component. For 2025 onward, an alternative simplified method generally uses 3% of expenses above half the preceding three-year average.
Business fit and eligible activity
Qualified California research by a wood-products manufacturer may produce a state credit. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Illustrative business benefit
Under the regular method, $200,000 of accepted California research expenses above the statutory base produces $30,000 at 15%, before tax-use limits. Do not substitute the federal 14% simplified rate for the California rate.
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Identify the technical uncertainty and start contemporaneous project records before trying to calculate the credit.
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.
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.
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.
Rehabilitation Credit (Internal Revenue Code §47)
Generally
A forest-products company rehabilitating a certified historic mill or industrial building for income-producing use may qualify.