Generators: air pollution regulations: sales and use taxes: exemptions.

Plain English Breakdown

The candidate explanation included a broader tax break claim that was not supported by the official source material.

Generators: Air Pollution Rules and Tax Breaks

AB-921 exempts portable or emergency backup generators from air pollution regulations during declared emergencies due to loss of electrical service, provides income tax credits for their purchase by individuals and small businesses between 2026 and 2031, and offers sales and use tax exemptions on such purchases up to $7,000 in May each year from 2027 to 2032.

What This Bill Does

• Exempts portable or emergency backup generators from air pollution regulations when the Governor declares a state of emergency due to loss of electrical service.
• Allows individuals and small businesses to claim an income tax credit up to $7,000 for purchasing backup generators for use in homes or commercial properties between 2026 and 2031. The maximum credit allowed per taxable year is $3,500.
• Provides an exemption from sales and use taxes on the purchase of qualified backup electricity generators costing up to $7,000 during May each year from 2027 to 2032.

Who It Names or Affects

• Individuals who purchase backup generators for their homes during emergencies or in May each year from 2027 to 2032.
• Small businesses that buy backup generators for commercial properties between January 1, 2026 and December 31, 2031.

Terms To Know

Emergency

A situation declared by the Governor where there is a loss of electrical service in any part of California.

Backup Generator

A portable or emergency generator used to provide electricity when regular power sources are not available.

Limits and Unknowns

• The tax credit and exemptions do not apply to commercial purchases.
• Local sales and use taxes, as well as state taxes dedicated for local government funding, are excluded from the exemption created by this bill.

Official Summary Text

AB 921, as amended, Castillo.
Generators: air pollution regulations:
income tax credits.
sales and use taxes: exemptions.
Existing
(1)
Existing
law, the California Emergency Services Act, sets forth the emergency powers of the Governor under its provisions and empowers the Governor to proclaim a state of emergency for certain conditions, including fire, flood, and severe energy shortage.
Existing law requires the State Air Resources Board to adopt cost-effective and technologically feasible
regulations to prohibit engine exhaust and evaporative emissions from new small off-road engines produced on or after a specified date.
This bill would exempt from those regulations and other regulations adopted by the state board the sale and purchase of portable or emergency backup generators during the period of time for which the Governor has proclaimed a state of emergency based on an emergency resulting in a loss of electrical service to any part of the state.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2026, and before January 1, 2031, equal to the amount incurred by a natural person or a small business, during the taxable year for the purchase of a backup generator, not to exceed $7,000, for use in a residence or commercial property. The bill would limit the credit allowed to $3,500 per taxable year.
(2) Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes.
This bill would, on and after January 1, 2027, and before January 1, 2032, provide an exemption from the taxes imposed by the Sales and Use Tax Law for the gross receipts of a qualified backup electricity generator, as defined, during the month of May, as specified. The bill would restrict the exemption to apply only to those generators with a cost not exceeding $7,000 and purchased for noncommercial purposes.
The
Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws.
This bill would provide that the exemption created by the bill does not apply to local sales and use taxes or transactions and use taxes.
Existing law imposes or dedicates certain state sales and use tax rates for local funding, including through the Local Revenue Fund 2011.
This bill would provide that the exemption created by the bill does not apply to those state
sales and use tax rates imposed or dedicated for local government funding, including those rates for which revenues are deposited into the Local Revenue Fund 2011.
Existing law requires any 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.

Current Bill Text

Download Bill PDF