Sales Tax Exclusion (STE) Program Grant

Sales Tax Exclusion (STE) Program Grant

Status: ACTIVE
Funder: California State Treasurer's Office
Amount: Up to US $10,000,000 in in-kind support
Last Updated: December 19, 2025

Summary

The Sales Tax Exclusion (STE) Program, managed by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), provides significant tax incentives for manufacturers in California who invest in equipment aimed at promoting alternative energy, advanced transportation, and recycling. This program not only supports the economy by creating high-paying jobs but also encourages sustainable practices in manufacturing. With a funding cap of $110 million annually, eligible applicants can receive up to $20 million for their projects.

Overview

Purpose CAEATFA supports California's mission to provide financial incentives to cutting-edge companies by offering a sales and use tax exclusion to manufacturers purchasing equipment to promote alternative energy, advanced transportation and recycling, as well as advanced manufacturing. These manufacturers create tens of thousands of high-paying, permanent jobs that bolster the state's economy. Description The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) Sales and Use Tax Exclusion (STE) Program (the “Program”) excludes from sales and use taxes purchases of Qualified Property: if its use is either to process Recycled feedstock or using Recycled feedstock in the production of another product or soil amendment, orthat is used in an Advanced Manufacturing process, orthat is used to manufacture Alternative Source products or Advanced Transportation Technologies. Eligible manufacturers planning to construct a new manufacturing facility or expand or upgrade a currently existing manufacturing facility may apply to CAEATFA for an STE award, and if approved, the purchases of Qualified Property for the project are not subject to state and local sales and use tax. The exclusion applies to Qualified Property purchases: tangible personal property if at least 50 percent of its use is either to process Recycled feedstock that is intended to be reused in the production of another product or using Recycled feedstock in the production of another product or soil amendment, ortangible personal property that is used in the state in an Advanced Manufacturing process, orfor the design, manufacture, production, or assembly of Advanced Transportation Technologies, or Alternative Source products, components, or systems. Generally, Qualified Property includes manufacturing machinery and equipment with an estimated useful lifespan of over one year, as well as information technology used to operate or control the machinery and equipment. Qualified purchases may also include tangible personal property required for infrastructure improvements to the manufacturing facility, such as foundation, reinforcement, piping, and fire safety. Qualified Property does not include consumables or the raw materials of which the product being manufactured is composed; typically this will include items with an estimated useful lifespan of less than one year. The property must be used to process Recycled feedstock or create another product or soil amendment utilizing Recycled feedstock, or in an Advanced Manufacturing process or for the manufacturing of the Alternative Source product or Advanced Transportation Technology for more than 50% of the time. Award Amount Statute limits the Program to awarding $110 million in sales and use tax exclusions in each calendar year. Applicants are limited to $10 million of STE in a given calendar year. However, during the first application period of the calendar year, $15 million of STE is available for the Board to award to applicants seeking more than the $10 million cap in STE. The $15 million in STE is awarded on a competitive basis on top of the $10 million cap, and requests are limited to $10 million in STE, for a total potential award of up to $20 million in STE. Also, $20 million in STE will be set aside for smaller Projects, those seeking an STE award of $2 million or less. If any of the $20 million in sales and use tax exclusion remains after September, it will be made available to award to all applicants. Applicants may also receive more than the $10 million individual cap at end of the calendar year if STE allocation is available after all other Applications are considered.

Eligibility

We've imported the main document for this grant to give you an overview. You can learn more about this opportunity by visiting the funder's website. Eligible GeographiesAvailable statewideEligible ApplicantsBusiness Individual Nonprofit Public Agency Tribal Government The STE is available to the following four categories of manufacturers in California:Alternative Source product manufacturers,Alternative Sources are defined in Public Resources Code Section 26003(a)(3) as:devices or technologies used for a renewable electrical generation facility,a combined heat and power system,distributed generation and energy storage technologies eligible under the self-generation incentive program pursuant to Section 379.6 of the Public Utilities Code, as determined by the Public Utilities Commission,a facility designed for the production of renewable fuels, the efficient use of which reduce the use of fossil or nuclear fuels, orenergy efficiency devices or technologies that reduce the need for new electric generation and reduce emissions of toxic and criteria pollutants and greenhouse gasesExamples of past Alternative Source manufacturing projects approved include: solar photovoltaic, biogas, biomass, landfill gas, and renewable fuels. Equipment used to manufacture these products is eligible under the STE award.Manufacturers of Advanced Transportation Technologies,Advanced Transportation Technologies are defined in Public Resources Code Section 26003(a)(2) as emerging commercially competitive transportation-related technologies capable of creating long-term, high value-added jobs for Californians while enhancing the state’s commitment to energy conservation, pollution and greenhouse gas emissions reduction, and transportation efficiency.Advanced Manufacturers,To qualify as an Advanced Manufacturer, the manufacturing process must meet all of the following requirements:Improve existing, or create entirely new materials, products, and processes through:the use of science, engineering, or information technologies,high-precision tools and methods,a high-performance workforce, andinnovative business or organizational models.Use any of the following technology areas:Micro- and nanoelectronics, including semiconductors.Advanced materials.Integrated computational materials engineering.Nanotechnology.Additive manufacturing.Industrial biotechnology.Result in a substantive advancement, whether incremental or breakthrough, beyond the current industry standard, in the production of materials and products.Be a sustainable manufacturing system that minimizes the use of resources while maintaining or improving cost and performance (not including systems or technologies required to be undertaken pursuant to state or federal law or regulations).Manufacturers that process Recycled feedstock or utilize Recycled feedstock in the production of another product or soil amendment.Recycled feedstock is defined as stated in Public Resources Code Section 26011.8(b)(2) as materials that would otherwise be destined for disposal, having completed their intended end use and product lifecycle.To qualify as a recycling project, the tangible personal property purchased for the project must be used at least 50% of the time to process Recycled feedstock that is intended to be reused in the production of another product or using recycled feedstock in the production of another product or soil amendment.Manufacturers of components of Alternative Sources and Advanced Transportation Technologies are also eligible if the component constitutes a “Green Component”, defined as the component or system within Advanced Transportation Technologies or Alternative Source products that is responsible for or required to enable the increase in energy efficiency, Alternative Source generation, or pollution reduction.