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California Gov. Gavin Newsom last month signed a bill aimed at restoring two crucial tax benefits for biotech companies. Reinstated after policy efforts from the Biotechnology Innovation Organization (BIO) and its affiliates, the legislation signifies a major win for biotech innovation and future cures, according to Good Day Bio.
Senate Bill 113 was created to give small businesses in California $1.6 billion in tax relief. The legislation restores California’s Research and Development Tax Credit, as well as the Net Operating Loss (NOL) Tax Deduction, both of which were suspended in 2020.
Important for California and biotech
“This bill is important not only for the state of California but also for biotechnology companies because business tax incentives like the Research and Development Tax Credit tax credit and the NOL tax deduction allow companies to defray the cost of their R&D efforts and the small emerging companies to be able to attract investors in their operations,” BIO’s Director of State Government Affairs, Brian Warren said.
Warren said he worked with affiliates in California, such as California Life Sciences and Biocom, and collaborated with the Newsom administration, to explain the topics to legislators, with the ultimate goal of helping the state of California maintain its position as the frontrunner of biotech innovation.
“This effort took a lot of people working together to accomplish and get it across the finish line,” Warren said.
BIO’s relationship with legislators and policymakers is important because it enables them to impact policies like these, Warren said. He explained that these tax incentives were eliminated as part of the budget process a couple of years ago, but because of the relationship between BIO’s state affiliates and elected officials and policymakers, it was possible to have these tax credits reinstated sooner than anticipated.
The result is legislation that benefits biotechnology workers and incentivizes them to proceed with their innovative work, Warren said.
