Personal Income Tax Law: Corporation Tax Law: tax credits: farming.

Plain English Breakdown

The official source does not specify that businesses must request a reservation from the Department of Food and Agriculture before claiming the credit, though it is implied in the bill's requirements.

Tax Credits for Farming

AB-2427 creates tax credits for agricultural businesses operating on at least 50 acres of land, with an increased credit if they purchase low-emission equipment or operate in high fire hazard areas.

What This Bill Does

• Creates a new tax credit for specified agricultural businesses starting in January 2027.
• The credit is equal to 25% of the business's qualified expenditures.
• Increases the credit by 5 percentage points to 30% if the business buys low-emission equipment or operates in high fire hazard areas.
• Limits each business’s credit to no more than $1,000,000 per year.
• Caps the total amount of credits at $250,000,000 for all businesses in a single year.

Who It Names or Affects

• Agricultural businesses operating on at least 50 acres of land
• The Department of Food and Agriculture
• The Franchise Tax Board

Terms To Know

Qualified expenditures

Money spent by a farming business that qualifies for the tax credit.

Low-emission equipment

Equipment used in farming that produces fewer pollutants than standard equipment.

Limits and Unknowns

• The bill limits each business’s credit to $1,000,000 per year.
• It caps the total amount of credits at $250,000,000 for all businesses in a single year.

Official Summary Text

AB 2427, as amended, Tangipa.
Personal Income Tax Law: Corporation Tax Law: tax credits: farming.
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 the taxes imposed by those laws for specified agricultural businesses that operate on at least 50 acres of land, as provided, equal to 25% of the business’s qualified expenditures, as defined. The bill would increase the credit
by 5%
to 30%
of qualified expenditures if the taxpayer purchases specified low-emission equipment or the
qualified taxpayer has
qualified expenditures
are related to the taxpayer’s
related to
operations in a high or very high fire hazard severity zone, as specified.
The bill would limit the credit to no more than $1,000,000.
The bill would cap the aggregate amount of the credit allowed at $250,000,000 for each taxable year, and would require a taxpayer to request a credit reservation from the Department of Food and Agriculture, as provided. The bill would require the Department of Food and Agriculture to coordinate with the Franchise Tax Board for the administration of the credit. The bill would require the Franchise Tax Board and the Department of Food and Agriculture to share
specified information, and would make the unauthorized disclosure of that information a misdemeanor. By expanding the scope of a crime, this bill would impose a state-mandated local program.
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 also include additional information required for any bill authorizing a new tax expenditure.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that
no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF