Tax Relief for Small Businesses

By: Madison Davis, President/CEO, Brisbane Chamber of Commerce, madison@brisbanechamber.org, 415-467-7283

On September 9th, Governor Gavin Newsom signed SB 1447, a bill aimed at providing a tax credit against personal income or corporate income taxes for one taxable year. Businesses would be eligible for a credit of $1,000 for each net increase in qualified employees hired by November 30th of this year, maxing out at $100,0000 per qualified small business employer. In addition, small businesses would need to submit an application to the Department of Tax and Fee Administration (CDTFA) for a tentative credit reservation. The application window will open December 1st 2020 and will close on January 1st 2021. “Qualified Small Business Employer” will be defined as a taxpayer who as of Dec 31st 2019 had 100 or fewer employees and experienced a 50% or more decrease in gross receipts from April 1, 2020-June 30, 2020 compared to the same months in 2019. Businesses have five years to use the credit and can apply it to any taxes owed including sales and use taxes.
The CDTFA has allotted $100 million worth of credits for businesses that apply, on a first-come, first-served basis. The bill establishes the Small Business Hiring Credit Fund for the purpose of applying the credits. According to the bill the purpose of the credit is to “provide financial relief for the economic disruptions resulting from COVID-19 that have resulted in unprecedented job losses.”
In addition to SB 1447, Newsom also signed AB 1577 which allows small businesses to exclude PPP loans that were forgiven, from gross income for state taxes. This mirrors the Federal Government’s treatment of PPP loans.