Proposed Tax Relief Bills for California
California’s Governor is expected to sign several tax-related and stimulus bills that the California General Assembly sent to him.
SB 139 will authorize a second Golden State Stimulus payment up to $1,100 per California taxpayer with an AGI of $75,000 or less. How much qualifying taxpayers will receive is dependent on their income, immigration status, and whether or not they have dependents.
AB 150 is for businesses and includes, but is not limited to, the following tax relief provisions:
- An elective passthrough entity tax of 9.3% for qualified S corporations, partnerships, and LLCs taxed as S corporations or partnerships from the 2021 through 2025 tax years. If shareholders or partners consent to this option, the tax will be applied to their pass-through income. They can claim a tax credit equaling their portion of the pass-through entity tax paid as an IRS-approved workaround for the $10,000 SALT deduction limitation;
- The reinstatement and expansion of the Main Street Hiring Credit that can be applied to income, franchise, or sales and use taxes for the 2021 tax year. Employers with 500 or less employees and a 20% decrease in gross receipts from 2019 to 2020 can claim this credit of up to $1,000 per net increase in full-time equivalent employees;
- The new income and franchise Homeless Person Hiring Credit between $2,500 and $10,000 per homeless person hired, according to how many hours the person works. The credit will be available from the 2022 through 2027 tax years.
AB 128 (Ch. 21-21) and SB 151 provides new and expanded grants, including but not limited to:
- $1.5 billion for COVID relief grants in California (more information can be found at https://careliefgrant.com/) and further funding for nonprofit cultural institutions;
- A California Competes Grants program to help businesses create at least 500 new full-time jobs, make $10 million or more in infrastructure investments, or to create jobs/invest in a high unemployment area. AB 129 will authorize $120 million towards this grant for the 2021-2022 fiscal year;
- New grants for live performance venues (including sports), nonprofit performing art programs, and microbusinesses in California that have been impacted by COVID-19.
We will continue to monitor the new and expanded California tax relief bills and will provide updates on their enactment. If you have any questions about the proposed bills, please contact us.