California Life Sciences Urges Governor Newsom to Honor Commitment to California Innovation, Restore Full R&D Tax Credit Instead of Raising Taxes
Sacramento, CA — May 14, 2026
California Life Sciences today issued the following statement in response to Governor Newsom’s decision to cap California’s research and development tax credit at $5 million:
“Permanently capping California’s R&D tax credit at $5 million is a major tax increase on the life sciences and we urge the Governor to reverse course.
At a time when Californians are stressed about affordability, the state’s global leadership in biomedical innovation is under threat, and biotech venture investment in California is declining, the Governor is proposing to effectively tax a sector that has been a shining star for the state and America. We call on the Legislature to protect patients, protect the future of new medical breakthroughs, and protect a critical revenue stream for California.
Life sciences R&D is among the most capital-intensive endeavors in any industry. Bringing a single new therapy or medical device from laboratory to patient can require billions of dollars and more than a decade of sustained investment, with no guarantee of return. The R&D tax credit exists precisely because policymakers recognized that this kind of long-horizon, high-risk research requires an environment where California is actively competing for every dollar of investment — not ceding ground to states and nations that are.
This comes as China continues to make significant strides in their mission to overtake the United States as the new global leader in biomedical innovation. The start-up biotech community in California continues to struggle attracting venture capital investment as venture firms opt to invest in Chinese biotech start-ups due to the higher regulatory risk index for innovation companies in California and the United States. Capping California’s R&D incentives at this moment sends precisely the wrong signal to the companies, investors, and researchers who are deciding where to build next.
The economics are clear: for every dollar invested in life sciences R&D almost three dollars flow back into the broader economy — through jobs, supply chains, tax revenue, and the downstream health benefits of treatments that reduce the cost of disease. The R&D tax credit for the life sciences is one of the highest-return investments California makes.
California’s leadership in life sciences is real, but it is not guaranteed. It requires a regulatory landscape that enables our ambitions to deliver new cures for patients around the world. California Life Sciences stands ready to work with the Governor to ensure California remains the world’s foremost destination for life sciences investment and innovation.”