Introduction
For years, California’s Enterprise Zone Hiring Credit helped businesses reduce state tax by hiring from targeted groups. Although the program expired in 2014, talk of revival bills and local variants in 2025 is back on the table.
This guide explores the current status of the credit, proposed changes, and how startup founders and employers can position themselves if the program returns.
California Tax Code and Legislative References
- R&TC §23621 (repealed) – Original Enterprise Zone Hiring Credit
- GO-Biz and ETP initiatives – Workforce incentive programs
- AB 1660 / SB 982 (2025 Proposed) – Local job tax incentive bills
What Was the Enterprise Zone Hiring Credit?
- Offered up to $37,440 per qualified employee over 5 years
- Applied to businesses located in designated Enterprise Zones
- Required hiring from targeted groups (veterans, ex-offenders, youth, etc.)
- Used CA Form 3805Z
Ended in 2014 and replaced with New Employment Credit (NEC), which was far more restrictive.
What’s New in 2025?
As of mid-2025:
- No formal statewide revival yet, but:
- Local zones like Stockton, Fresno, and Bakersfield have launched pilot hiring credits
- Bills like AB 1660 seek to recreate enterprise-style hiring incentives for high-unemployment zip codes
- Credits would apply to qualified wages and be refundable in limited cases
Example: Hiring in South LA in 2025
Example: GreenByte Labs opens a recycling startup in South Los Angeles. If AB 1660 passes, they may:
- Get a $5,000 -$8,000 credit per new full-time employee
- Qualify if they hire ex-offenders or veterans
- Reduce CA PIT or Franchise Tax liability
Step-by-Step: How to Prepare if the Credit Returns
- Watch for Legislative Updates
Track bills like AB 1660 or local incentive programs through FTB and GO-Biz sites. - Identify Qualified Employees
Veterans, long-term unemployed, low-income, formerly incarcerated, and youth in high-need areas. - Track Payroll Records by Employee Type
Segment wages and employment dates by eligible category. - Use Third-Party Certifiers
Local workforce agencies or EDD offices will verify eligibility. - File Early
Credits will be time-bound and possibly capped. Prepare early filings via new state forms (TBD).
Conclusion
While the original Enterprise Zone Credit is gone, California may reintroduce targeted hiring credits in 2025.
If your startup is hiring from underrepresented or distressed communities, now is the time to structure payroll and HR practices to qualify if the revival takes place.
Call to Action
Want to position your startup for upcoming California hiring credits?
Book a planning session with Anshul Goyal, CPA, EA, FCA
Anshul helps startups:
- Navigate hiring-based tax credits
- Set up compliant payroll and recordkeeping
- Prepare for quick credit filings when new laws are passed
Don’t miss retroactive credits plan now:
https://calendly.com/anshulcpa/
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. Is the CA Enterprise Zone Hiring Credit active in 2025?
No, but revival proposals are under legislative review.
2. Are there any local versions of this credit?
Yes, some cities have pilot programs or regional hiring credits.
3. Who qualifies as a targeted employee?
Veterans, ex-offenders, long-term unemployed, and low-income residents.
4. What form was used for the old credit?
Form 3805Z, now obsolete.
5. What’s the replacement credit currently?
The New Employment Credit (NEC), though far narrower in scope.