AB-976 • 2026

Personal Income Tax Law: Corporation Tax Law: California Retail Security Tax Credit.

Labor Taxes

Passed Legislature

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

Sponsor: Ávila Farías
Last action: 2026-02-02
Official status: From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
Effective date: Not listed

Plain English Breakdown

The official source material does not specify whether businesses need prior approval from a committee to claim the tax credit, but it is implied that there is an approval process managed by the California Tax Credit Allocation Committee and the Franchise Tax Board.

California Retail Security Tax Credit

AB-976 creates a new tax credit for small businesses in disadvantaged communities to help them pay for security measures against retail theft, with specific limits and requirements.

What This Bill Does

Creates a tax credit for businesses operating in disadvantaged communities with total gross annual receipts of no greater than $5 million and up to 25 employees.
Allows the credit to cover expenses related to preventing retail theft at their retail locations in California, not exceeding $4,000 per taxable year.
Limits the total amount of this tax credit that can be given out each year to $10 million.

Who It Names or Affects

Small businesses operating in disadvantaged communities with less than $5 million in annual sales and up to 25 employees.
The California Tax Credit Allocation Committee and the Franchise Tax Board, which will manage the approval process for the tax credits.

Terms To Know

disadvantaged community: A specific area in California that has been identified as economically challenged or underserved.
tax credit: An amount of money a business can subtract from the taxes it owes to the government.

Limits and Unknowns

The tax credit is only available for two years, starting in January 2026 and ending before January 2028.
Businesses must spend their own money on security measures first before they can claim the tax credit.
There are limits to how much a business can get back as a tax credit each year.

Bill History

2026-02-02 California Legislative Information
From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
2026-01-31 California Legislative Information
Died pursuant to Art. IV, Sec. 10(c) of the Constitution.
2025-05-05 California Legislative Information
In committee: Set, second hearing. Held under submission.
2025-04-29 California Legislative Information
Re-referred to Com. on REV. & TAX.
2025-04-28 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2025-03-24 California Legislative Information
In committee: Set, first hearing. Referred to suspense file.
2025-03-17 California Legislative Information
Re-referred to Com. on REV. & TAX.
2025-03-14 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2025-03-10 California Legislative Information
Referred to Com. on REV. & TAX.
2025-02-21 California Legislative Information
From printer. May be heard in committee March 23.
2025-02-20 California Legislative Information
Read first time. To print.

Official Summary Text

AB 976, as amended, Ávila Farías.
Personal Income Tax Law: Corporation Tax Law: California Retail Security Tax 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, 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
California Tax
Credit Allocation Committee,
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.

Current Bill Text

Read the full stored bill text

Download Bill PDF