The California Chamber of Commerce and a coalition of business leaders are urging Governor Gavin Newsom to consider restoring California’s research and development (R&D) tax credit as he prepares for his January budget proposal.
Along with the CalChamber, the coalition includes the California Manufacturers & Technology Association, California Life Sciences, TechNet, Los Angeles County Economic Development Corporation, San Jose Chamber and Bicom California.
In a recent letter, the coalition stressed that the tax credit, which was suspended in the 2024–2025 State budget, is crucial to nurture innovative businesses that generate good-paying jobs, create a circle of related economic activity in the broader R&D community, enhance productivity and attract investment to California.
Now that State tax revenues are tracking ahead of projections for the next state budget cycle, the Governor should consider the R&D tax credit restoration a top priority, the coalition urged.
The coalition pointed out that 34 other states offer tax credits and other enticements for companies to locate or relocate R&D facilities in their state, and California should restore its credits to stay competitive.
In 2021, more than 700,000 jobs were directly related to R&D activities in California, including roles like researchers, technicians, and support staff. Additionally, California’s universities, think tanks and government agencies all benefit from their collaboration with R&D facilities across the state.
Restoring the tax credit will also reinforce California’s role in artificial intelligence, biotechnology, chip development and alternative energy, the coalition said.
“The R&D tax credit certainly creates much more revenue flowing into state coffers than it costs,” it said.
