California has signed into law a new $2 billion manufacturing tax credit for retailers.
The program will go into effect Jan. 1, 2017.
It was created as part of a broader package of state tax incentives that President Donald Trump signed in December.
The state says it will generate $2.5 billion over five years.
California’s retail industry has been struggling to grow, and the new credit will help retailers to stay competitive in a world where many states have been pushing back against new manufacturing technology.
The state’s new manufacturing tax credits are aimed at boosting the supply chain by encouraging manufacturers to manufacture at a higher rate.
The credits will be used to pay for goods produced within California’s manufacturing facilities.
Manufacturers will receive the credit at a rate of 1 percent for each dollar of the value of their manufacturing equipment.
Manufactures with a total manufacturing capacity of 2 million or more workers and less than 500 employees will be eligible for a maximum $250 million credit.
The credit is aimed at helping companies like Staples Inc., Amazon.com Inc., Target Corp. and others that rely heavily on the state for raw materials.
The bill also includes $2 million in state funds for the state’s Fair Trade program.
The Fair Trade Act requires the state to encourage and support fair trade practices.
The new law also requires the Fair Trade Commission to develop a new tool for assessing fair trade claims.