About this programme
The Sales and Use Tax Exclusion (STE) Program is run by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), housed in the office of the California State Treasurer. It excludes qualifying equipment purchases from California state and local sales and use tax for manufacturers building a new California manufacturing facility, or expanding or upgrading an existing one.
Qualified Property falls into four categories: Alternative Source products (solar manufacturing, renewable hydrogen, biofuels, dairy biodigesters), Advanced Transportation Technologies (zero-emission vehicles and charging stations), Advanced Manufacturing (food production, aerospace, biopharmaceutical, and similar processes), and equipment used to process recycled feedstock or use it to make another product or soil amendment.
The exclusion is not a cash grant or rebate. An approved applicant presents an exemption certificate to its equipment vendors, so sales and use tax is simply not charged at the time of purchase (or, in specific circumstances, reimbursed after the fact through the vendor or the California Department of Tax and Fee Administration, CDTFA). CAEATFA's Board reviews and votes on applications; no exclusion is automatic on filing.
The Program was set to sunset January 1, 2026, but SB 86 (McNerney, Chapter 211, Statutes of 2025) extended its statutory sunset to January 1, 2028, and requires CAEATFA to report to the Legislature by January 31, 2027 on the Program's net effect on jobs and economic output.
How it works
CAEATFA opens defined application periods during the year; the Executive Director announces the periods, deadlines, tentative Board-meeting dates, and the amount of exclusion available for each round by March 31 of that calendar year on the Authority's website.
An application package has two parts plus the fee: Part A (project narrative, legal questionnaire, applicant certification, and project details such as permit status and estimated timeline) and Part B, submitted together with the non-refundable Application Fee.
CAEATFA staff review each application for completeness and the reasonableness of the assumptions used, and may request supporting documentation or more detailed calculations before the application goes to the Board.
The CAEATFA Board considers and votes on applications at its public Board meetings; meeting information is posted on the Authority's website at least ten days in advance.
Once approved, the applicant does not pay sales and use tax on Qualified Property purchases going forward for the project — it presents a CDTFA-recognized exclusion certificate to vendors instead of paying the tax at checkout.
Approved applicants must file semi-annual compliance reports: the report covering the first two calendar quarters is due by July 31, and the report covering the last two calendar quarters is due by January 31 of the following year.
Statute caps the Program at $100 million in sales and use tax exclusions awarded statewide per calendar year, and caps any single applicant at $15 million of STE in a given calendar year.
Who can apply
Manufacturers planning to construct a new manufacturing facility in California, or expand or upgrade an existing one, may apply if the equipment being purchased is Qualified Property under one of the Program's four categories: Alternative Source products, Advanced Transportation Technologies, Advanced Manufacturing, or recycled-feedstock processing/use.
Eligibility is equipment-specific and project-specific, not a general business-type qualification — CAEATFA's application review turns on whether the described project and purchases meet the statutory and regulatory definitions of Qualified Property for the claimed category.
How to apply
- Watch for CAEATFA's Notice of Application Periods, published on the Authority website by March 31 each year, for that year's application windows, deadlines, and available exclusion amount.
- Prepare Part A (project narrative, legal questionnaire, applicant certification, permit status, project timeline) and Part B of the application.
- Submit the completed application package electronically to CAEATFA (steprogram@treasurer.ca.gov) at least 60 days before the scheduled Board meeting for that round, along with the Application Fee — the fee must reach CAEATFA within five business days of the round's deadline unless the submission is a resubmission.
- Respond to any CAEATFA staff requests for supporting documentation or additional calculations during the completeness/reasonableness review.
- Attend or await the CAEATFA Board meeting where the application is considered and voted on; Board meeting details are posted at least ten days ahead of the meeting.
- If approved, begin presenting the exclusion certificate to Qualified Property vendors instead of paying sales and use tax on those purchases, and track compliance obligations (including the semi-annual reports) going forward.
Documents you’ll typically need
- Application Part A — project narrative, legal questionnaire, applicant certification, permit status, and estimated project timeline
- Application Part B
- Application Fee payment (non-refundable except where CAEATFA does not perform a review)
- Supporting documentation and detailed calculations, if requested by CAEATFA staff during review
- Semi-annual compliance reports (post-approval, due July 31 and January 31 each year)
Frequently asked
What exactly does the STE Program exclude?
It excludes purchases of Qualified Property from California state and local sales and use tax. Qualified Property covers equipment for Alternative Source products (e.g. solar manufacturing, renewable hydrogen, biofuels, dairy biodigesters), Advanced Transportation Technologies (ZEV vehicles and charging stations), Advanced Manufacturing (e.g. food production, aerospace, biopharmaceutical), and equipment that processes or uses recycled feedstock.
Who can apply?
Manufacturers constructing a new manufacturing facility in California, or expanding or upgrading an existing one, where the equipment being purchased for that project qualifies as Qualified Property under one of the four statutory categories.
Is this a cash grant?
No. Approved applicants do not receive money. They present an exclusion certificate to equipment vendors so the sales and use tax is not charged at purchase, or in specific circumstances seek reimbursement from the vendor or CDTFA for tax already paid on Qualified Property before approval.
How much can be excluded, and is there a cap?
Statute caps the whole Program at $100 million in sales and use tax exclusions awarded across all applicants per calendar year, and caps any single applicant at $15 million of STE within a given calendar year.
What does the application cost?
The Application Fee is 0.05% (one twentieth of one percent) of the total Qualified Property amount identified in the application as originally submitted, with a minimum of $500 and a maximum of $10,000. It is non-refundable except where CAEATFA does not perform a review of the application.
How is an application reviewed and approved?
CAEATFA staff first review the application for completeness and the reasonableness of its assumptions, sometimes requesting more supporting detail. The CAEATFA Board then considers and votes on the application at a public Board meeting, which is posted on the Authority's website at least ten days in advance.
What happens after approval?
Approved applicants must file semi-annual compliance reports with CAEATFA — one covering the first two calendar quarters, due by July 31, and one covering the last two, due by January 31 of the following year — to remain in compliance with the award.
How long will the Program be available?
The Program's statutory sunset was extended from January 1, 2026 to January 1, 2028 by SB 86 (McNerney, Chapter 211, Statutes of 2025), which also requires CAEATFA to report to the Legislature by January 31, 2027 on the Program's job and economic-output effects.
Reviewed 2026-08-16. Programmes change — confirm current eligibility, amounts and deadlines on the official page before you apply. CapEasy is a private consultancy and is not affiliated with any government authority.