The businesses will qualify for the "Business Tax Holiday" exemption only if they gross less than $500,000 a year. The exemption will only last until the end of 2012.
"We sent the message loud and clear that Los Angeles is committed to leveraging every resource it has to attract businesses and put Angelenos back to work," said Mayor Antonio Villaraigosa.
The tax holiday could create up to 55,000 new jobs, according to a study from the Marshall School of Business at USC. The measure was first brought up in July.