Corporation Tax Law: tax expenditures: No Tax Breaks for ICE Contractors Act of 2026.

The bill now directly enacts tax restrictions on corporations contracting with DHS rather than merely stating legislative intent to do so in future legislation. The old Section 2 (intent statement) is removed and its operative provisions are consolidated into the enacted chapter.

Removed specific prohibitions on employer pension contributions exclusion (Section 17501) and employer health plan contributions exclusion (Section 17131). The new version only denies 'any tax expenditure for corporations subject to reporting pursuant to Section 13305 of the Government Code,' which is a narrower formulation.

Removed the provision that would have deemed the act inoperative for any single tax year upon determinations by both the Governor and Attorney General that DHS activities were within expected boundaries of lawfulness or not instigating civil unrest. This eliminated a political off-ramp from the tax penalty.

Added Section 25003(c), which exempts the Franchise Tax Board from the Administrative Procedure Act for any standards, criteria, procedures, determinations, rules, notices, guidelines, or other guidance issued under this chapter. This allows the FTB to implement the tax denial without going through formal rulemaking.

The requirement that revenue savings be directed toward legal services for people in the federal immigration legal process was removed from the intent section. The California Immigrant Resilience Fund mechanism remains in Section 25003(b), but the explicit policy directive language is gone.

The bill changed from a non-binding statement of legislative intent to an operative law adding Chapter 16 (Sections 25000-25004) to the Revenue and Taxation Code, effective immediately as a tax levy.

The introduced version only barred specific exclusions (pension contributions, health plan contributions) and reporting-related expenditures. The amended version denies ALL tax expenditures available under the Corporation Tax Law to contracting corporations, a significantly broader prohibition.

Added formal definitions: 'contracting corporation' means any taxpayer contracting with DHS directly or through subcontracts; 'Department of Homeland Security' explicitly includes ICE, CBP, and Management Directorate; 'tax expenditure' is defined broadly as any credit, deduction, exclusion, exemption, or other tax benefit under the Corporation Tax Law.

Added a defined operative period: taxable years beginning on or after January 1, 2027, and before January 1, 2032, with a sunset clause repealing the chapter as of December 1, 2032.

Established the California Immigrant Resilience Fund in the State Treasury. The Franchise Tax Board must estimate revenue savings (first by June 1, 2027, then annually) and notify the Controller, who transfers that amount from the General Fund to the fund for immigration-related services including removal defense, upon legislative appropriation.

Voting requirement changed from simple majority to two-thirds of each house, because the bill results in a taxpayer paying a higher tax under Article XIIIA Section 3 of the California Constitution. Fiscal committee review also changed from 'no' to 'yes.'

The bill text was reformatted from the legislative counsel's printed layout (with line numbers, page headers/footers) to the standard web-published format used on the California Legislature website. No changes to any operative language.