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 purposes of that credit, various requirements relating to work within those tracts or areas are further prescribed. Under that credit, "qualified wages" are defined to mean wages that meet specified requirements and that portion of the wages paid or incurred by the qualified taxpayer during the taxable year to each qualified full-time employee that exceeds 150% of minimum wage, but does not exceed 350% of minimum wage. Under that credit, however, if the qualified full-time employee is employed in a designated pilot area, "qualified wages" are defined to mean wages that meet specified requirements and that portion of wages paid or incurred by the qualified taxpayer to each qualified full-time employee that exceeds $10 per hour or an equivalent amount for salaried employees, but does not exceed 350% of minimum wage. For purposes of that credit, a qualified full-time employee is defined as an individual who meets certain requirements, including that they are, upon commencement of employment with the qualified taxpayer, unemployed, a veteran, an ex-offender previously convicted of a felony, or a recipient of CalWORKs, general assistance, or the federal earned income credit, as those requirements are further described. 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 remove, for taxable years beginning on or after January 1, 2023, the requirement that the work performed by the qualified full-time employee be in a designated census tract or economic development area, and would make conforming and related changes to remove requirements relating to those tracts and areas. The bill would expand the definition of qualified full-time employee to also include an employee claimed by the qualified taxpayer during the taxable year, as described, for a federal work opportunity credit, as defined. The bill would instead define "qualified wages" to mean that portion of wages paid or incurred by the qualified taxpayer during the taxable year to each qualified full-time employee that exceeds 150% of the minimum wage, but does not exceed 350% of minimum wage, among other things. This bill would prohibit the requirement that the board determine the aggregate tentative reservation amount and aggregate small business tentative reservation amount from being construed to limit the aggregate amount of credits granted to all qualified taxpayers. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would provide information in compliance with that requirement. 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.