In the course of hosting seminars and visiting businesses in the district, our office is frequently asked for information regarding the Manufacturing and Research & Development Equipment Exemption. Find out if your business qualifies for this exemption by referencing the information below.
California businesses in the manufacturing, research and development sectors are currently eligible for a partial tax exemption on qualified purchases. Under this new law eligible businesses will get a sales tax break of up to $41.88 for every $1,000 spent on qualified purchases.
To be eligible you must be a qualifying business, purchase or lease qualified equipment, and use that qualified equipment for purposes approved under the guidelines of the exemption. In some instances the manufacturing exemption can also apply to new business construction (if the building is deemed a special purpose structure).
The exemption applies to many costs associated with operating a business:
- Construction costs related to special purpose structures.
- Buildings and foundations used in manufacturing, processing, refining, fabricating, or recycling.
- Qualified lease payment, regardless of when lease was originated.
- Contractor or sub-contractor purchases on behalf of a qualified business.
- Computers and software sold to operate manufacturing equipment.
- Parts used in the repair and maintenance of equipment.
- Tangible personal property used to meet California air quality standards.
- Equipment used for testing and measuring of qualified R&D property.
The exemption is part of the Governor’s Office of Business and Economic Development (GO-Biz) effort to encourage businesses in the growing manufacturing, research, and technology sectors to continue (or move) their work in California.
Please visit our website to find out more about the exemption, and to see if your business qualifies, or call the BOE Information Center at 1-800-400-7115.