Pass the Manufacturers’ Investment Credit (MIC) – SB 587
California manufacturing is at a crossroads. While the state remains a global leader in innovation, its manufacturing sector faces increasing challenges from international competition and rising operational costs. To maintain and grow high-wage, high-skill jobs, California must invest in its manufacturing future.
SB 587 (Grayson, 2025) proposes a targeted tax credit to incentivize new and continued investment in California’s manufacturing and research and development sectors. This credit would apply to the local portion of sales and use taxes paid on qualified tangible personal property, such as machinery and equipment, used in manufacturing and R&D activities. By reducing the effective cost of these investments, SB 587 aims to encourage manufacturers to expand and modernize their operations within the state.
Key Benefits of SB 587
- Encourages Investment: Provides financial incentives for manufacturers to invest in new equipment and technologies, fostering innovation and competitiveness.
- Supports Small Manufacturers: About 64% of California manufacturers have fewer than 25 employees. This credit would help level the playing field for small businesses, enabling them to grow and thrive.
- Promotes High-Wage Jobs: Manufacturing jobs in California pay more than $25,000 above the average non-farm wage, supporting families and communities across the state.
- Strengthens the Economy: Manufacturing accounts for 10% of California's economic output, generating approximately $300 billion annually. The sector also exported $159 billion worth of goods in 2024, bolstering the state's position in global markets.