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SB-302 • 2026

Personal Income Tax Law and Corporation Tax Law: exclusions: environmental credits.

Personal Income Tax Law and Corporation Tax Law: exclusions: environmental credits.

Taxes
Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor
Padilla
Last action
2025-10-01
Official status
Chaptered by Secretary of State. Chapter 215, Statutes of 2025.
Effective date
Not listed

Plain English Breakdown

The official source material does not provide specific details on how the additional requirements for tax expenditures will be implemented in practice.

Environmental Credits Exclusion from Taxes

The law excludes certain environmental credits and related payments from personal income and corporation taxes, aligning with federal rules.

What This Bill Does

  • Excludes refund payments for specified environmental credits from gross income for individuals and corporations starting in 2026.
  • Allows eligible taxpayers to transfer the value of these environmental credits without including the payment received as consideration for this transfer in their gross income.
  • Prohibits transferees from deducting the amount paid as consideration for transferring environmental credit values.

Who It Names or Affects

  • Individuals who receive refunds or payments related to environmental credits.
  • Corporations that benefit from environmental credits and their transfers.

Terms To Know

Environmental Credits
Refunds given for actions that help the environment, like reducing pollution.
Gross Income
Total income before taxes and other deductions are taken out.

Limits and Unknowns

  • The law only applies to taxable years starting on or after January 1, 2026.
  • It is unclear how the new requirements for tax expenditures will be implemented in practice.

Bill History

  1. 2025-10-01 California Legislative Information

    Chaptered by Secretary of State. Chapter 215, Statutes of 2025.

  2. 2025-10-01 California Legislative Information

    Approved by the Governor.

  3. 2025-09-22 California Legislative Information

    Enrolled and presented to the Governor at 11 a.m.

  4. 2025-09-11 California Legislative Information

    Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2881.) Ordered to engrossing and enrolling.

  5. 2025-09-10 California Legislative Information

    In Senate. Concurrence in Assembly amendments pending.

  6. 2025-09-10 California Legislative Information

    Read third time. Passed. (Ayes 79. Noes 0. Page 3175.) Ordered to the Senate.

  7. 2025-09-02 California Legislative Information

    Read second time. Ordered to third reading.

  8. 2025-08-29 California Legislative Information

    From committee: Do pass. (Ayes 15. Noes 0.) (August 29).

  9. 2025-08-20 California Legislative Information

    August 20 set for first hearing. Placed on APPR. suspense file.

  10. 2025-07-17 California Legislative Information

    Read second time and amended. Re-referred to Com. on APPR.

  11. 2025-07-17 California Legislative Information

    From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (July 14).

  12. 2025-07-17 California Legislative Information

    Assembly Rule 63 suspended. (Ayes 49. Noes 15. Page 2578.)

  13. 2025-07-15 California Legislative Information

    July 14 set for first hearing. Placed on REV. & TAX. suspense file.

  14. 2025-07-01 California Legislative Information

    June 30 hearing postponed by committee.

  15. 2025-06-05 California Legislative Information

    Referred to Com. on REV. & TAX.

  16. 2025-05-29 California Legislative Information

    In Assembly. Read first time. Held at Desk.

  17. 2025-05-29 California Legislative Information

    Read third time. Passed. (Ayes 38. Noes 0. Page 1324.) Ordered to the Assembly.

  18. 2025-05-27 California Legislative Information

    Ordered to special consent calendar.

  19. 2025-05-23 California Legislative Information

    Read second time. Ordered to third reading.

  20. 2025-05-23 California Legislative Information

    From committee: Do pass. (Ayes 6. Noes 0. Page 1195.) (May 23).

  21. 2025-05-16 California Legislative Information

    Set for hearing May 23.

  22. 2025-04-07 California Legislative Information

    April 7 hearing: Placed on APPR. suspense file.

  23. 2025-04-01 California Legislative Information

    Set for hearing April 7.

  24. 2025-03-27 California Legislative Information

    Read second time and amended. Re-referred to Com. on APPR.

  25. 2025-03-26 California Legislative Information

    From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 5. Noes 0. Page 568.) (March 26).

  26. 2025-03-18 California Legislative Information

    Set for hearing March 26.

  27. 2025-02-19 California Legislative Information

    Referred to Com. on REV. & TAX.

  28. 2025-02-11 California Legislative Information

    From printer. May be acted upon on or after March 13.

  29. 2025-02-10 California Legislative Information

    Introduced. Read first time. To Com. on RLS. for assignment. To print.

Official Summary Text

SB 302, Padilla.
Personal Income Tax Law and Corporation Tax Law: exclusions: environmental credits.
Existing law, the Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. Existing federal law authorizes an applicable entity, as defined, to receive a refund for specified environmental credits against the taxes imposed under federal law and excludes a refund payment made pursuant to that law from gross income. Existing federal law also authorizes an eligible taxpayer, as defined, to transfer the value of that refundable credit and exempts from gross income payment received by the transferor as consideration for the transfer. Existing federal law prohibits the transferee from deducting the amount paid as consideration for the transfer.
This bill,
in conformity with federal law, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would exclude from gross income a refund payment made for the specified federal environmental credits described above and any payment received by a transferor as consideration for a transfer, as provided. The bill would also prohibit a transferee from deducting the amount paid as consideration for the transfer, in conformity with federal law.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives 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.
This bill would take effect immediately as a tax levy.

Current Bill Text

Read the full stored bill text 
Download Bill PDF