California Budget Trailer Bills Include Important Tax Provisions
On June 28, Governor Newsom and California legislators announced an agreement on a new 2021-2022 budget. The announcement comes after months of negotiations between legislative leaders and the Governor’s office. Included in the agreement are a number of trailer bills that contain several major tax-related items, including additional Golden State Stimulus payments for taxpayers making less than $75,000 and additional tax relief for certain Californians.
Among the noteworthy trailer bills is
AB 150, which extends a number of select tax credits such as the Main Street Hiring Credit and the California Competes Credit. AB 150 also creates an elective passthrough entity tax, which serves as work-around to California’s $10,000 SALT deduction limitation for owners of passthrough entities.
According to CSEA Legislative Advocate Jennifer Tannehill, “At the beginning of the pandemic the legislature was concerned the state would face large deficits, so it suspended NOL and limited tax credits. Despite the large budget surplus that emerged ($70 billion), the majority in the legislature is refusing to lift the NOL suspension and tax credit limitations.” You can read analyses of AB 150
here.
Other important trailer bill provisions are included in
AB 138 and
SB 138, which include language that would require EDD to make unemployment benefits available through direct deposit.