City of El Segundo – Business-Friendly Policies

El Segundo supports business growth through: 

• Streamlined permitting and development coordination

• Strong support for aerospace, defense, tech, and creative industries

• Active economic development engagement

Business License Tax Credit (Local Incentive)

Eligible businesses may benefit from a sales tax credit applied toward future business license tax:

• Credit: 40% of sales tax generated

• Potential value: Up to $25,000 over three years

• A unique local incentive for El Segundo businesses 

California Research & Development (R&D) Tax Credit

This credit is based on the federal research credit, with modifications. Businesses may qualify for this credit if they engage in qualified research activities in California.

• In-house R&D: 15% credit

• Outside research: 24% credit

• Applies to: California income and franchise tax

• Carryforward: Yes

Manufacturing & R&D Equipment Tax Savings

A partial sales and use tax exemption allows for qualified manufacturers, researchers and developers on equipment purchases and leases. 

• Exemption: ~3.94% of the state sales/use tax

• Eligible businesses: Manufacturing, R&D, biotech, aerospace, defense, food processing

• Eligible purchases: Qualified new & used manufacturing and R&D equipment

• How received: Claimed at the time of purchase

• Status: Extended through 2030

• Program Guide: California Dept. of Tax & Fee Administration Publication 541 

California Competes Tax Credit

A competitive state income tax credit for companies that are expanding, relocating, or retaining operations in California.

Awards consider:

• Number of jobs created or retained

• Capital investment in California

• Long-term commitment to remain in the state

• Administered by the Governor's Office of Business & Economic Development (GO-Biz) with multiple application rounds each year.

CAEATFA Sales & Use Tax Exclusion (STE)

A state tax incentive that helps manufacturers save on equipment purchases by excluding eligible purchases from California state and local sales and use taxes (often about 8–10% of the purchase price).

• Benefit: 100% exemption of state and local sales/use tax (8% - 10% savings)

• Eligible industries & technologies may include:

  • Aerospace & defense manufacturing

  • Semiconductors & electronics

  • Advanced & additive manufacturing

  • Advanced materials & nanotechnology

  • Industrial biotechnology

  • Clean energy & advanced transportation

• Requirement: Application & approval required before purchase

• Status: Authorized through 2028 

• STE Program flyer

Employment Training Panel (ETP) – California Workforce Training Funding

Reimbursement funding that helps employers train workers, upgrade skills, and support good-paying, long-term jobs.

• Contract amounts: ~$50,000 – $1,000,000

• Reimbursement rate: ~$11 – $28 per training hour, per employee

• Eligible training may include: Job skills, technology, safety, productivity, and industry-specific/customized training (on-site, off-site, or online).

• ETP Program Fact Sheet

Transitional Subsidized Employment (TSE)

A state-supported workforce program that provides wage reimbursement and paid work experience for qualifying new hires.

• Benefit: Wage subsidy for eligible participants during a temporary work placement

• Eligible employers: California businesses working with approved workforce partners

• Program resource: South Bay Workforce Investment Board

Federal Research & Development (R&D) Tax Credit

A federal tax credit for qualified research activities in the United States:

• Credit: Equal to 20% of qualified U.S. research expenses

• Eligible activities may include:

  • Engineering & product development

  • Software & systems development

  • Manufacturing process improvements

  • Aerospace, defense, and advanced technology R&D

• Eligible businesses may use the credit to offset payroll taxes

Federal Hiring & Workforce Incentives

Veteran Employment Assistance / On-the-Job Training (OJT)

Federal programs help employers hire and train Veterans while reducing training and wage costs.

• On-the-Job Training (OJT): Employers may pay a training-level wage while Veterans learn job duties, with training support provided through the U.S. Department of Veterans Affairs

• Special Employer Incentive (SEI): Employers may be eligible for wage reimbursement of up to 50% for a limited period when hiring certain Veterans

• Hiring support: Access to job-ready Veterans referred through VA employment programs

Work Opportunity Tax Credit (WOTC)

• Helps employers hire individuals in eligible target groups:

• Benefit: Federal tax credit of up to $9,600 for hiring qualifying individuals