Three California Tax Relief Bills Signed into Law

At the beginning of July, California Governor Newsom enacted three tax-related bills aimed at providing relief to Californians. Read on for details of the new legislation.

Relief for Middle Class Californians

Per AB 192 (Ch. 22-51), qualified California taxpayers can look forward to a one-time payment of up to $1050. In order to qualify, for the Middle Class Tax Refund, taxpayers must meet the following criteria, as enumerated on the State of California’s Franchise Tax Board (FTB) website:

  • Must have filed your 2020 tax return by October 15, 2021
  • Must meet the California adjusted gross income requirements (see the FTB website for further details)
  • Must have been a California resident for at least six months of the 2020 tax year
  • Must not have been eligible to be claimed as a dependent in the 2020 tax year
  • Must be a California resident on the date the payment is issued

Payments are expected to begin going out by the end of October 2022; all payments are expected to be completed by the middle of the following January.

Relief for the Cannabis Industry

AB 195 (CH. 22-56) is a two-part relief bill aimed at the California cannabis industry. The legislation both suspends the cannabis cultivation tax and changes the collection method for the cannabis excise tax (shifting from it being collected from the distributor to it being collected at the point of sale).

Miscellaneous Relief Provisions

AB 194 (Ch. 22-52) includes a range of provisions. Key items include:

  • An extension of California provisions regarding the treatment of Paycheck Protection Program (PPP) loan forgiveness
  • A penalty abatement program for individual taxpayers who file late for the first time (applies to tax years beginning on or after January 1, 2022)
  • A partial exemption from the sales and use tax for diesel fuel (applies for a 366-day period, beginning October 1, 2022)
  • An allowance for taxpayers to claim the 2020 and 2021 Main Street Small Business Tax Credit on amended tax returns
  • A five-year extension of the California Competes Tax Credit (now extends through the 2027-2028 fiscal year)

If you have any questions about these new pieces of legislation and how they might impact you, please do not hesitate to reach out to your Bowman & Company, LLP professional.