Spring 2003

Table of Contents

Cal-Tax Home

Email Editor

Guest Commentary 

Chris Micheli is an attorney and registered lobbyist for the Sacramento governmental relations firm of Carpenter Snodgrass & Associates (916/447-2251), where he specializes in tax legislative matters.

More than 2.25 million taxpayers claimed personal income tax credits totaling nearly $970.3 million in 2001, according to Franchise Tax Board figures, but only eight of the credits are widely used.

The eight most widely used credits are: Child and Dependent Care; Enterprise Zone Hiring and Sales/Use Tax; Manufacturers’ Investment; Nonrefundable Renters; Other State Taxes; Prior Year Alternative Minimum Tax; Research and Development, and Teachers Retention.

By total number of taxpayers claiming the credit, the following are the top five most widely used PIT credits: Nonrefundable Renters; Child and Dependent Care; Teachers Retention; Other State Taxes, and Prior Year Alternative Minimum Tax

By total amount of credits claimed, the following are the top five most widely used PIT credits: Other State Taxes; Child and Dependent Care; Teachers Retention; Prior Year Alternative Minimum Tax, and Nonrefundable Renters.

The following PIT credits have less than $100,000 in annual amount of credits claimed: Agricultural Transportation; Community Development Financial Institutions (CDFI) Deposits; Dependent Parent; Disabled Access; Enhanced Oil Recovery; Enterprise Zone Hiring and Sales/Use; Enterprise Zone Wages; Farmworker Housing Construction; Joint Strike Fighter Wages/Property; Local Agency Military Base Recovery Area (LAMBRA); Manufacturing Enhancement Area, and Prison Inmate Labor.

The following PIT credits have fewer than 100 claimants: Agricultural Transportation; CDFI Deposits; Enhanced Oil Recovery; Farmworker Housing Construction; Joint Strike Fighter Wages/Property; LAMBRA; Manufacturing Enhancement Area; Natural Heritage Preservation; Prison Inmate Labor, and Rice Straw.

Actual Personal Income Personal Income Tax Credit Usage

The following data, for the most recent tax year available (2001), was derived from FTB documents. The credits (in alphabetical order) are broken down by the number of claimants and the total amount of credits claimed.

Overview of Corporate Tax Credits

California also provides a number of corporate tax credits. As can be seen from the following chart, five credits out of 18 are widely used, based upon the number and amount of credits claimed. The corporate credits that enjoy the most usage are:  Enterprise Zone Hiring and Sales/Use; Low-Income Housing; Manufacturers’ Investment; Prior Year Alternative Minimum Tax; and, Research and Development. In the 2000 tax year, 10,028 taxpayers claimed $1.158 billion from the 18 credits.

By total numbers of taxpayers claiming the credit, the following are the top five most widely used corporate credits: Manufacturers’ Investment; Research and Development; Enterprise Zone Hiring and Sales/Use; Prior Year Alternative Minimum Tax, and Disabled Access.

By total amount of credits claimed, the following are the top five most widely used corporate credits: Research and Development; Manufacturers’ Investment; Enterprise Zone Hiring and Sales/Use; Prior Year Alternative Minimum Tax, and Low-Income Housing.

Actual Corporate Tax Credit Usage

The following data, for the most recent tax year available (2000), was derived from FTB documents. The credits (in alphabetical order) are broken down by the number of claimants and the total amount of credits claimed.