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AB-1565 • 2026

Income and corporation taxes: credits: work opportunity credit.

Income and corporation taxes: credits: work opportunity credit.

Crime Labor Taxes
Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
Ta
Last action
2026-03-16
Official status
In committee: Set, first hearing. Referred to suspense file.
Effective date
Not listed

Plain English Breakdown

The exact amount of tax credit for each business is not specified in the bill text.

Work Opportunity Tax Credit

AB-1565 allows businesses to claim a tax credit of up to 40% of the wages paid to individuals with felony convictions hired within one year of their release or conviction.

What This Bill Does

  • Allows a new tax credit for businesses that hire certain individuals who have been convicted of felonies and are employed during the taxable year beginning on or after January 1, 2027, through December 31, 2031.
  • Limits the credit to 40% of the wages paid to these employees during their first year after being hired or released from prison.
  • Requires detailed goals, performance indicators, and data collection for this tax expenditure.

Who It Names or Affects

  • Businesses that hire individuals with felony convictions within one year of their release or conviction date.
  • Individuals who have been convicted of a felony and are hired by businesses within one year after the date they were convicted or released from prison.

Terms To Know

Qualified taxpayer
A business that hires certain individuals with recent felony convictions.
Qualified employee
An individual who has been convicted of a felony and is hired within one year after their conviction or release from prison.

Limits and Unknowns

  • The bill does not specify the exact amount of tax credit for each business.
  • It's unclear how this will be enforced or monitored by tax authorities.

Bill History

  1. 2026-03-16 California Legislative Information

    In committee: Set, first hearing. Referred to suspense file.

  2. 2026-02-02 California Legislative Information

    Referred to Com. on REV. & TAX.

  3. 2026-01-13 California Legislative Information

    From printer. May be heard in committee February 12.

  4. 2026-01-12 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 1565, as introduced, Ta.
Income and corporation taxes: credits: work opportunity credit.
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 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.

Current Bill Text

Read the full stored bill text 
Download Bill PDF