Personal Income Tax Law: exclusions: guaranteed income pilot programs.

Plain English Breakdown

The official source material does not support the claims about setting tax rates for publicly held corporations or requiring specific details for new tax expenditure bills. These were removed from the summary.

Extending Tax Exclusions for Guaranteed Income Programs

The bill extends an exclusion from personal income taxes for payments received from guaranteed income pilot programs until July 1, 2031.

What This Bill Does

• Extends the exclusion of payments from guaranteed income pilot programs from gross income until July 1, 2031.

Who It Names or Affects

• People who receive payments from guaranteed income pilot programs.

Terms To Know

Compensation ratio

The relationship between a corporation's executive compensation and its overall performance or profits.

Tax expenditure

A reduction in tax revenue that results from provisions of the tax code, such as exclusions, deductions, credits, deferrals, and preferential rates.

Limits and Unknowns

• The bill does not specify how the guaranteed income pilot programs will be funded beyond July 1, 2031.
• It is unclear what specific performance indicators are required for new tax expenditure bills.

Official Summary Text

SB 573, as amended, Smallwood-Cuevas.
Corporation taxes: tax rates: publicly held corporations.
Personal Income Tax Law: exclusions: guaranteed income pilot programs.
The Personal Income Tax Law, in conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, and provides various exclusions from gross income, including, until July 1, 2026, an exclusion for payments received from a guaranteed income pilot program or related grants, as specified. Existing law repeals this exclusion as of January 1, 2027.
This bill would extend the above-referenced exclusion from gross income until July 1, 2031, and would repeal it as of January 1, 2032.
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 also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
The Corporation Tax Law imposes taxes according to or measured by net income at a rate of 8.84%, or for financial institutions, at a rate of 10.84%, as specified.
This bill, for taxable years beginning on and after January 1, 2026, would revise that rate for taxpayers that are publicly held corporations, as defined, and instead impose an applicable tax rate from 7% to 13%, or for financial institutions, from 9% to 15%, based on the compensation ratio, as defined, of the corporation. This bill would increase the applicable tax rate by 50% for those taxpayers that have a specified decrease in full-time employees employed in the United States as compared to an increase in contracted and foreign full-time employees, as described.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of
2
3
of the membership of each house of the Legislature.
This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF