Business Organizations

CA to offer tax credit for hiring homeless workers

California businesses hiring workers who are homeless can get up to $30,000 a year in tax credit starting 2022 under a budget bill signed by Gov. Gavin Newsom on Friday.

Businesses must pay at least 120% of the state’s minimum wage to be eligible. Businesses must also get certification from a homeless service provider for each hire.

Those eligible will qualify for the credit of $2,500 to $10,000 per employee hired per year, depending on hours worked. The state will allocate up to $30 million a year for the program, which will expire at the end of 2026.

Business organizations and workforce development boards have pushed for the program, which they said could create jobs for thousands of Californians who are homeless. A similar tax credit has been in place in Utah, where employers are eligible for tax credits of $2,000 per new hire.

Sen. María Elena Durazo, D-Los Angeles, and Assemblyman Richard Bloom, D-Santa Monica, had introduced the program earlier this year, which has been folded into the state’s budget.

“This is all about adding another tool for our state to address the crisis of homelessness throughout the state,” Durazo said about the program in May at a committee hearing. “I strongly believe that our resources should go into programs that offer individuals experiencing homelessness a chance to really take charge in their lives and that means a job, a decent paying job.”

California Workforce Association, which represents local workforce development boards, cited a 2020 study by the California Policy Lab which found the vast majority of homeless individuals in Los Angeles County had recent work experience before losing their housing.

With California having more than 160,000 residents who are homeless, advocates acknowledged the program is limited in its scope, helping up to 3,000 individuals who would work full-time. But the program could expand if proven successful, Bloom told the Santa Monica Daily Press.

The budget bill signed by Newsom also includes a number of other tax credits. Small businesses hiring new employees now qualify for a $1,000 credit for each worker hired. The bill also gives some businesses a way to work around the $10,000 cap on the state and local tax deduction created by the 2017 tax law President Donald Trump signed.

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Jeong Park joined The Sacramento Bee’s Capitol Bureau in 2020 as part of the paper’s community-funded Equity Lab. He covers economic inequality, focusing on how the state’s policies affect working people. Before joining the Bee, he worked as a reporter covering cities for the Orange County Register.