The Manufacturer's Investment Credit is a state tax incentive available to qualified companies engaged in manufacturing. To qualify, your company needs to be engaged in at least one line of business that is classified as an operating establishment under specific manufacturing categories of the Standard Industrial Classification (SIC) System. (2000 - 3999)

This six percent credit can be used to offset income or franchise tax based upon the purchase or lease of manufacturing and related equipment which is "depreciable" under certain federal regulations and has California sales or use tax paid on its purchase.

The credit may also include certain capitalized "direct" labor costs and may include the costs of creating clean rooms for electronics, semiconductors, satellite software and pharmaceutical activities.

The credit can be claimed against the bank and corporation tax. Any unused credit can be carried forward for eight to ten years. These credits can be combined with Enterprise Zone Credits for even greater benefits.

Certain limitations and record keeping requirements apply. For complete details refer to the Franchise Tax Board's Manufacturers Investment Credit Frequently Asked Questions or contact your tax advisor.

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