Taxation: credits: California New Employment Credit.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including, for taxable years beginning on or after January 1, 2014, and before January 1, 2026, a credit to a qualified taxpayer that hires a qualified full-time employee within a designated census tract or economic development area and that receives a tentative credit reservation for that qualified full-time employee. For the purposes of that credit, a qualified full-time employee is defined as an individual who meets certain requirements and satisfies at least one of two specified conditions relating to the number of hours the employee works and is paid. For purposes of that credit, certain employers that are primarily engaged in certain services, including food services, are excluded from claiming the credit. For purposes of that credit, existing law defines qualified wages for areas in and outside of a designated pilot area and provides areas that may be designated as a designated pilot area are limited to areas within a designated census tract or an economic development area with average wages less than the statewide average wages, as described, and areas within a designated census tract or an economic development area based on high poverty or high unemployment. Existing law requires the Franchise Tax Board to determine the aggregate tentative reservation amount and the aggregate small business tentative reservation amount for a calendar year. This bill would make various changes to the above-described credit, including expanding the definition of qualified taxpayer by permitting a taxpayer that is primarily engaged in certain services, including food services, to claim the credit. For purposes of meeting the definition of qualified full-time employee, the bill would permit, for these qualified taxpayers, an employee to be paid qualified wages by the qualified taxpayer for services not less than an average of 30 or 25 hours per week, depending on the type of service the employee provides. The bill would specify additional conditions an employee is required to satisfy to be considered a qualified full-time employee. The bill would also, among other things, define "high unemployment" for purposes of designated pilot areas and amend the wage requirements for qualified wages. The bill would apply these changes for taxable years beginning on or after January 1, 2023. The bill also makes clarifying and other nonsubstantive changes. This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. This bill would take effect immediately as a tax levy.