(1) The Personal Income Tax Law allows various credits against the taxes imposed by that law, including, for taxable years beginning on or after January 1, 2024, a credit in an amount equal to the greater of the dues paid to a labor organization during the taxable year by an individual multiplied by a workers' tax credit adjustment factor, as described, or an amount of dues paid by an individual not to exceed a specified amount, as provided in the annual Budget Act. Existing law provides that the workers' tax credit adjustment factor is 0% and the dollar amount allowed is $0 for each taxable year unless otherwise specified in the annual Budget Act, as provided. Existing law states the intent of the Legislature that the values provided in the annual Budget Act be calculated to limit the annual revenue loss resulting from the credit to no more than $400,000,000.
This bill would provide that the provision specifying that the workers' tax credit adjustment factor is 0% and the dollar amount allowed is $0 for each taxable year unless otherwise specified in the annual Budget Act applies to taxable years beginning on or after January 1, 2025. The bill would remove the statement of the intent of the Legislature that the values provided in the annual Budget Act be calculated to limit the annual revenue loss resulting from the credit to no more than $400,000,000.
(2) The Personal Income Tax Law allows a credit against the taxes imposed by that law to a qualified renter, as specified, in an amount equal to $120 for spouses filing joint returns, heads of household, and surviving spouses, or $60 for other individuals. Existing law allows specified payments to eligible individuals from the Tax Relief and Refund Account, a continuously appropriated fund, including specified amounts of certain credits in excess of tax liability, as provided.
This bill, for taxable years beginning on or after January 1, 2023, would increase the credit amount for qualified renters to $250, if the qualified renter has no dependents, and to $500 if the qualified renter has one or more dependents. The bill, for each taxable year beginning on or after January 1, 2024, would require the Franchise Tax Board to recompute the credit amount to adjust for the percentage change in the California Consumer Price Index, as specified. The bill, for taxable years beginning on or after January 1, 2023, would allow a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability to a qualified renter, as provided. By authorizing new payments from the Tax Relief and Refund Account in excess of personal income tax liabilities, the bill would make an appropriation.
(3) The Personal Income Tax Law, in modified conformity with federal income tax laws, allows an earned income tax credit against personal income tax and a payment from the Tax Relief and Refund Account, a continuously appropriated fund, for an allowable credit in excess of tax liability to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law, as determined by the earned income tax credit adjustment factor, as specified.
This bill, for taxable years beginning on or after January 1, 2023, if the amount of credit computed for an eligible individual is less than $275, as specified, would allow the credit for the eligible individual to be $275, except as otherwise specified. By authorizing additional payment amounts from the Tax Relief and Refund Account, a continuously appropriated fund, the bill would make an appropriation.
(4) Existing law, the Corporation Tax Law, imposes a tax according to or measured by net income, computed at a rate of 8.84% upon the basis of the net income for that taxable year, on every corporation, and at a rate of 1.5% for every "S" corporation, except as provided. Existing law also imposes a minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or doing business in this state, and an annual tax in an amount equal to the minimum franchise tax on every limited partnership, limited liability partnership, and limited liability company registered, qualified to transact business, or doing business in this state, as specified.
This bill, for taxable years beginning on or after January 1, 2023, would adjust the rate of tax for corporations described above to be 6.63% for taxable income up to and including $1,500,000, and 10.99%, except as specified, for taxable income over $1,500,000. The bill would adjust the rate of tax for "S" corporations to be 1.125% for taxable income up to and including $1,500,000, and 1.5% for taxable income over $1,500,000. The bill would also reduce the minimum franchise tax and the annual tax for taxable years beginning on or after January 1, 2023, to $600, as specified.
(5) Existing law establishes various public social services and programs, including, among others, the California Work Opportunity and Responsibility to Kids (CalWORKs) program, the Homeless Youth Act of 2018, and the Homeless Housing, Assistance, and Prevention program. Existing law establishes a public school financing system that requires state funding for county superintendents of schools, school districts, and charter schools to be calculated pursuant to a local control funding formula, as specified.
This bill would create the Critical Needs Fund in the State Treasury, and would make the moneys in the fund available upon appropriation by the Legislature for the purpose of funding schools, providing childcare services, helping struggling hospitals, and reducing homelessness. The bill would require, on or before May 14, 2024, and annually thereafter, the Department of Finance to estimate the total amount of additional net revenues, if any, derived from the prior taxable year due to the amendments to the corporate tax rates specified above, minus the estimated revenue lost, if any, due to the amendments to the credits described above by this act and specified constitutional requirements. The bill, upon direction from the Department of Finance, would require the Controller to transfer the amount estimated from the General Fund to the Critical Needs Fund, as specified.
(6) 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 XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.
(7) This bill would make findings and declarations related to a gift of public funds.
(8) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Statutes affected:
02/21/23 - Amended Senate: 17144.8 RTC
05/25/23 - Amended Senate: 17052 RTC, 17053.5 RTC, 17053.75 RTC, 23151 RTC, 23153 RTC, 23802 RTC, 17144.8 RTC