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