Under the Personal Income Tax Law and the Corporation Tax Law, various provisions of the federal Internal Revenue Code, as enacted as of a specified date, are referenced in various sections of the Revenue and Taxation Code. Those laws provide that, for taxable years beginning on or after January 1, 2025, the specified date of those referenced Internal Revenue Code sections is January 1, 2025, unless otherwise specifically provided.
This bill would further update various references to the Internal Revenue Code for the purposes of the Personal Income Tax Law and the Corporation Tax Law, including by deleting outdated references to repealed provisions of federal income tax laws and updating references to the Internal Revenue Code to reduce confusion.
The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal income tax laws, provide a deduction from income for interest paid on indebtedness incurred in the ordinary course of a trade or business. Existing federal income tax law establishes a limit on the amount of interest that can be deducted based in part on the taxpayer's adjusted taxable income, as defined. Existing law specifically does not conform to this limitation on deduction of business interest for purposes of the Corporation Tax Law.
This bill would, for taxable years beginning on or after January 1, 2025, provide that the limit on deductibility for business interest under federal income tax law does not apply for purposes of the Personal Income Tax Law.
This bill would take effect immediately as a tax levy.

Statutes affected:
SB 1435: 17024.5 RTC, 17052 RTC, 17077 RTC, 17085 RTC, 17091 RTC, 17156.1 RTC, 17201.3 RTC, 17225 RTC, 17250 RTC, 17260 RTC, 17276 RTC, 17276.1 RTC, 17276.3 RTC, 17276.4 RTC, 17276.7 RTC, 17276.21 RTC, 17276.22 RTC, 17276.24 RTC, 17279 RTC, 17302 RTC, 17551 RTC, 17560.5 RTC, 17737 RTC, 17865 RTC, 18044 RTC, 18624 RTC, 19311 RTC, 23051.5 RTC, 23609 RTC, 24355.5 RTC, 24416 RTC, 24416.1 RTC, 24416.3 RTC, 24416.4 RTC, 24416.7 RTC, 24416.21 RTC, 24416.22 RTC, 24452 RTC, 24956 RTC, 25110 RTC
03/11/26 - Introduced: 17024.5 RTC, 17052 RTC, 17077 RTC, 17085 RTC, 17091 RTC, 17156.1 RTC, 17201.3 RTC, 17225 RTC, 17250 RTC, 17260 RTC, 17276 RTC, 17276.1 RTC, 17276.3 RTC, 17276.4 RTC, 17276.7 RTC, 17276.21 RTC, 17276.22 RTC, 17276.24 RTC, 17279 RTC, 17302 RTC, 17551 RTC, 17560.5 RTC, 17737 RTC, 17865 RTC, 18044 RTC, 18624 RTC, 19311 RTC, 23051.5 RTC, 23609 RTC, 24355.5 RTC, 24416 RTC, 24416.1 RTC, 24416.3 RTC, 24416.4 RTC, 24416.7 RTC, 24416.21 RTC, 24416.22 RTC, 24452 RTC, 24956 RTC, 25110 RTC