San Diego

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Tax Incentives

The City of San Diego offers business incentives that are aligned with PDF icon City Council Policy 900-12 , giving companies an edge in the marketplace and helping them expand and prosper. 

California Competes  

This flexible tax credit promotes job creation and business attraction, expansion and retention efforts in California. Companies submit online applications to obtain state tax credits. The program is administered by California Governor's Office of Business and Economic Development (GO-Biz).

For more information, please visit the California Competes Tax Credit Program.



Partial Sales Tax Exemption 

The Partial Sales Tax Exemption affords businesses a 4.19 percent state sales tax exemption to reduce the tax on manufacturing and research & development (R&D) equipment purchases. The exemption is administered by the California Department of Fees and Tax Administration.

For more information regarding qualifying equipment and eligibility requirements for this tax exemption, please visit the state of California of Fees and Tax Administration -  PDF icon Manufacturing and Research & Development Exemption Program.

New Employment Credit

The State of California's New Employment Credit (NEC) allows San Diego businesses an opportunity to capture valuable tax credits intended to reduce their annual state income tax liability. The NEC allows qualifying companies to capture up to $56,000 in tax credits (per qualified employee) for hiring recently discharged military veterans, ex-offenders, long-term unemployed persons, and public assistance recipients.

For more information regarding employer and employee eligibility requirements for the state’s NEC, please visit the California Franchise Tax Board - New Employment Credit Frequently Asked Questions.

Please click on the following link (New Employment Credit Estimator) if you would like to find out if your business may be eligible for state tax credits based on full-time employees hired after Jan. 1, 2014.

Sales and Use Tax

Since July 2014, manufacturers and certain R&D companies may qualify for partial exemption of sales and use tax on certain job-related equipment purchases and leases. More information and eligibility requirements can be found at the Tax Guide for Manufacturing and Research & Development Equipment Exemption.

Business Cooperation Program 

The City's Business Cooperation Program can provide sales and use tax rebates of up to $0.425/dollar of local tax allocated to the City of San Diego when a business implements new practices for sales, purchasing or tax accounting. The program is designed to reallocate local sales and use taxes. It does not cause an increase in the amount of sales and use taxes paid by participating businesses. 

Fee Payment Incentive Program 

The Fee Payment Incentive Program affords businesses an opportunity to recoup certain City of San Diego Development Services Department Fees (i.e. Impact fees, Review fees, Express Plan check service) paid by the business associated with submitting and securing required building permit entitlements. Based on the number of full-time jobs created, sales tax revenue generated, and/or capital investment, reimbursement amounts can be up to $10,000. 

Requirements: The business must provide proof of City of San Diego Business Tax Certificate. Projects must be located in the City of San Diego and in the Promise Zone, Enterprise Zone, or Low- Medium Income census tract, click here to access the interactive map.

Contact Us

For additional information about incentives in Manufacturing and Logistics industries or Innovation and Technology industries, please contact Karina Danek at 619-533-5954 or kdanek@sandiego.gov or the Economic Development Department at sdbusiness@sandiego.gov.