Budget & Taxes (Tax Credits)

The Personal Income Tax Law and the Corporation Tax Law allow a credit against the taxes imposed by those laws, for taxable years beginning on or after January 1, 2021, and before January 1, 2027, for rehabilitation of certified historic structures, as defined, and, under the Personal Income Tax Law, for a qualified residence, as defined. Existing law allows an increased credit of 25% of the qualified rehabilitation expenditures with respect to a certified historic structure meeting any of certain criteria, including a rehabilitated structure that includes affordable housing for lower income households. Existing law requires a taxpayer to receive an allocation from the California Tax Credit Allocation Committee (CTCAC) to be eligible for the credit. Existing law limits the aggregate amount of money that can be allocated for these credits per calendar year. Existing law requires, on an annual basis beginning January 1, 2021, until January 1, 2027, the Legislative Analyst to collaborate with the CTCAC and the State Office of Historic Preservation to review the effectiveness of these tax credits, as described. This bill would require the Legislative Analyst to submit a review of the effectiveness of the tax credits for taxable years beginning on or after January 1, 2025, and before January 1, 2027, to the Legislature, as specified. This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would enact a similar credit against the taxes imposed by the Personal Income Tax Law and the Corporation Tax Law for the rehabilitation of certified historic structures, as provided. The bill, for tax credits allocated for those taxable years, would remove the above-described increased credit of 25% and would remove the credit for a qualified residence. The bill would also remove the limit on the amount of money that can be allocated per calendar year, and would instead require the limit to be set by the Legislature in the annual Budget Act or another measure. The bill would provide additional requirements relating to the manner in which the credits are allocated. Existing law requires any bill authorizing a new tax expenditure, as defined, to include exclusions from income, 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 include findings and reporting requirements in compliance with this requirement. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law allows various credits against the taxes imposed by that law. This bill, for each taxable year beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against the taxes imposed under that law to a qualified taxpayer, as defined, for the qualified expenses of in vitro fertilization, as defined, not to exceed $5,000 paid or incurred during the taxable year. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes to a qualified taxpayer in an amount equal to 40% of the qualified wages paid or incurred to a qualified employee employed during the taxable year. The bill would define a qualified employee for this purpose to mean an individual that, among other things, has been convicted of a felony, as provided, and has a hiring date not more than one year after the date the individual was convicted or was released from prison. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new income tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes to qualified taxpayers, defined to mean certain fast food restaurant franchisees or independent operators, in the amount of $12,000 per qualified fast food restaurant, as defined. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

(1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would allow a credit against those taxes to a qualified taxpayer for student loan payments, as defined, made by the qualified taxpayer on behalf of a qualified full-time employee, as defined, not to exceed $3,000 per employee during the taxable year. The bill would define qualified taxpayer for this purpose to mean a taxpayer whose employees do not perform jobs described by specified federal law. The bill would limit the aggregate amount of credits allocated to $25,000,000 per year, and would require the Franchise Tax Board, in coordination with the Student Aid Commission, to allocate the credit through tentative credit reservations, as described. (2) The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines "gross income" as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would provide an exclusion from gross income for student loan payments made by a qualifying employer, as defined, on behalf of a qualified taxpayer, as defined, that is a full-time employee. (3) Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. (4) This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2028, would allow a credit against the taxes imposed by those laws to a business operating in a disadvantaged community, as described, with total gross annual receipts of no greater than $5,000,000, with 25 or fewer employees in an amount equal to the taxpayer's qualified retail theft prevention measure expenses at retail locations in the state, not to exceed $4,000 per taxable year, and subject to a credit reservation by the Franchise Tax Board, as specified. The bill would limit the total amount of tax credits allocated per taxable year to $10,000,000. Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, 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 include findings and reporting requirements in compliance with this requirement. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law in modified conformity with federal income tax laws, generally allows various deductions in computing the income that is subject to tax imposed under that law. This bill would, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, allow a deduction in computing income for out-of-pocket medical costs, as defined. The bill would limit the deduction to $5,000 per taxable year. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law allows various credits against the taxes imposed by that law. This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2025, and before January 1, 2030, to a qualified taxpayer, as defined, in an amount equal to 40% of the taxpayer's qualified expenses, as defined, not to exceed $400 per taxable year, or $2,000 cumulatively. Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. The bill would also include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law allows various credits against the taxes imposed by that law. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against the taxes imposed by that law to a qualified taxpayer in an amount equal to the qualified income earned by the qualified taxpayer for medical services, as defined, performed in a rural area in the state, not to exceed $5,000 per taxable year, as specified. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law allows various credits against the taxes imposed by that law. This bill would allow a credit against those taxes for taxable years beginning on or after January 1, 2026, and before January 1, 2031, in an amount equal to the unreimbursed amount paid or incurred by a qualified teacher during the taxable year for instructional materials and classroom supplies, as defined, not to exceed $250. The bill would define qualified teacher as a teacher in a public, charter, or private school offering instruction in kindergarten or any of grades 1 to 12, inclusive, for at least 900 hours during a school year. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.