| 1 | 1 | | CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 386Introduced by Assembly Member TangipaFebruary 03, 2025 An act to add and repeal Sections 17053.83, 17139.4, and 23632 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTAB 386, as introduced, Tangipa. Personal Income Tax Law: Corporation Tax Law: credits: student loan payments.(1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes to a qualified taxpayer for student loan payments made by the qualified taxpayer on behalf of a full-time employee, as defined, not to exceed $3,000 per employee during the taxable year. The bill would define qualified taxpayer for this purpose to mean a business whose employees do not perform jobs described by specified federal law. The bill would limit the aggregate amount of credits allocated to $25,000,000 per year, and would require the Franchise Tax Board to allocate the credit, as described.(2) The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would provide an exclusion from gross income for student loan payments made by a qualifying employer, as defined, on behalf of a taxpayer that is a full-time employee.(3) Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. (4) This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 17053.83 is added to the Revenue and Taxation Code, to read:17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows:(A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees.(B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed.(2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed.(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(j) The section shall remain operative only until December 1, 2031, and as of that date is repealed.SEC. 2. Section 17139.4 is added to the Revenue and Taxation Code, to read:17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer.(b) For purposes of this section, the following definitions apply:(1) Full-time employee means an employee of a qualifying employer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) This section shall remain operative only until January 1, 2031, and as of that date is repealed.SEC. 3. Section 23632 is added to the Revenue and Taxation Code, to read:23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 3 | 3 | | CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 386Introduced by Assembly Member TangipaFebruary 03, 2025 An act to add and repeal Sections 17053.83, 17139.4, and 23632 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTAB 386, as introduced, Tangipa. Personal Income Tax Law: Corporation Tax Law: credits: student loan payments.(1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes to a qualified taxpayer for student loan payments made by the qualified taxpayer on behalf of a full-time employee, as defined, not to exceed $3,000 per employee during the taxable year. The bill would define qualified taxpayer for this purpose to mean a business whose employees do not perform jobs described by specified federal law. The bill would limit the aggregate amount of credits allocated to $25,000,000 per year, and would require the Franchise Tax Board to allocate the credit, as described.(2) The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would provide an exclusion from gross income for student loan payments made by a qualifying employer, as defined, on behalf of a taxpayer that is a full-time employee.(3) Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. (4) This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO |
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| 9 | 9 | | CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION |
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| 11 | 11 | | Assembly Bill |
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| 13 | 13 | | No. 386 |
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| 15 | 15 | | Introduced by Assembly Member TangipaFebruary 03, 2025 |
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| 17 | 17 | | Introduced by Assembly Member Tangipa |
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| 18 | 18 | | February 03, 2025 |
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| 20 | 20 | | An act to add and repeal Sections 17053.83, 17139.4, and 23632 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. |
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| 22 | 22 | | LEGISLATIVE COUNSEL'S DIGEST |
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| 24 | 24 | | ## LEGISLATIVE COUNSEL'S DIGEST |
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| 25 | 25 | | |
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| 26 | 26 | | AB 386, as introduced, Tangipa. Personal Income Tax Law: Corporation Tax Law: credits: student loan payments. |
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| 28 | 28 | | (1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes to a qualified taxpayer for student loan payments made by the qualified taxpayer on behalf of a full-time employee, as defined, not to exceed $3,000 per employee during the taxable year. The bill would define qualified taxpayer for this purpose to mean a business whose employees do not perform jobs described by specified federal law. The bill would limit the aggregate amount of credits allocated to $25,000,000 per year, and would require the Franchise Tax Board to allocate the credit, as described.(2) The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would provide an exclusion from gross income for student loan payments made by a qualifying employer, as defined, on behalf of a taxpayer that is a full-time employee.(3) Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. (4) This bill would take effect immediately as a tax levy. |
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| 30 | 30 | | (1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. |
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| 32 | 32 | | This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes to a qualified taxpayer for student loan payments made by the qualified taxpayer on behalf of a full-time employee, as defined, not to exceed $3,000 per employee during the taxable year. The bill would define qualified taxpayer for this purpose to mean a business whose employees do not perform jobs described by specified federal law. The bill would limit the aggregate amount of credits allocated to $25,000,000 per year, and would require the Franchise Tax Board to allocate the credit, as described. |
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| 34 | 34 | | (2) The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. |
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| 36 | 36 | | This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would provide an exclusion from gross income for student loan payments made by a qualifying employer, as defined, on behalf of a taxpayer that is a full-time employee. |
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| 38 | 38 | | (3) Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements. |
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| 40 | 40 | | This bill would include additional information required for any bill authorizing a new tax expenditure. |
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| 42 | 42 | | (4) This bill would take effect immediately as a tax levy. |
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| 43 | 43 | | |
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| 44 | 44 | | ## Digest Key |
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| 46 | 46 | | ## Bill Text |
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| 48 | 48 | | The people of the State of California do enact as follows:SECTION 1. Section 17053.83 is added to the Revenue and Taxation Code, to read:17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows:(A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees.(B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed.(2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed.(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(j) The section shall remain operative only until December 1, 2031, and as of that date is repealed.SEC. 2. Section 17139.4 is added to the Revenue and Taxation Code, to read:17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer.(b) For purposes of this section, the following definitions apply:(1) Full-time employee means an employee of a qualifying employer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) This section shall remain operative only until January 1, 2031, and as of that date is repealed.SEC. 3. Section 23632 is added to the Revenue and Taxation Code, to read:23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 50 | 50 | | The people of the State of California do enact as follows: |
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| 52 | 52 | | ## The people of the State of California do enact as follows: |
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| 54 | 54 | | SECTION 1. Section 17053.83 is added to the Revenue and Taxation Code, to read:17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows:(A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees.(B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed.(2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed.(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(j) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 56 | 56 | | SECTION 1. Section 17053.83 is added to the Revenue and Taxation Code, to read: |
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| 58 | 58 | | ### SECTION 1. |
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| 59 | 59 | | |
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| 60 | 60 | | 17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows:(A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees.(B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed.(2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed.(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(j) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 61 | 61 | | |
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| 62 | 62 | | 17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows:(A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees.(B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed.(2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed.(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(j) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 63 | 63 | | |
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| 64 | 64 | | 17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows:(A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees.(B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed.(2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed.(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.(j) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 65 | 65 | | |
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| 66 | 66 | | |
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| 67 | 67 | | |
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| 68 | 68 | | 17053.83. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the net tax, as that term is defined in Section 17039, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year. |
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| 69 | 69 | | |
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| 70 | 70 | | (b) For purposes of this section, the following definitions shall apply: |
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| 71 | 71 | | |
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| 72 | 72 | | (1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following: |
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| 73 | 73 | | |
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| 74 | 74 | | (A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week. |
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| 75 | 75 | | |
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| 76 | 76 | | (B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer. |
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| 77 | 77 | | |
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| 78 | 78 | | (2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee. |
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| 79 | 79 | | |
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| 80 | 80 | | (3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of the Title 20 of the United States Code. |
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| 81 | 81 | | |
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| 82 | 82 | | (c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23632 shall not exceed twenty-five million dollars ($25,000,000) per calendar year. |
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| 83 | 83 | | |
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| 84 | 84 | | (d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section: |
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| 85 | 85 | | |
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| 86 | 86 | | (1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board. |
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| 87 | 87 | | |
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| 88 | 88 | | (2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following: |
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| 89 | 89 | | |
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| 90 | 90 | | (A) Businesses that are owned by veterans. |
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| 91 | 91 | | |
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| 92 | 92 | | (B) Businesses that are owned by women. |
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| 93 | 93 | | |
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| 94 | 94 | | (C) Employers that employ no more than 500 employees at any time during the taxable year. |
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| 95 | 95 | | |
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| 96 | 96 | | (D) Businesses that are minority owned. |
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| 97 | 97 | | |
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| 98 | 98 | | (E) Businesses that are owned by disabled individuals. |
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| 99 | 99 | | |
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| 100 | 100 | | (e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. |
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| 101 | 101 | | |
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| 102 | 102 | | (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. |
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| 103 | 103 | | |
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| 104 | 104 | | (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. |
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| 105 | 105 | | |
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| 106 | 106 | | (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. |
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| 107 | 107 | | |
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| 108 | 108 | | (i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed pursuant to this section and Section 23632, as well as the exclusion allowed pursuant to Section 17139.4, the Legislature finds and declares as follows: |
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| 109 | 109 | | |
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| 110 | 110 | | (A) The specific goal of the credit and exclusion is to encourage employers to assist in reducing the overwhelming burden of student loan payments on their employees. |
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| 111 | 111 | | |
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| 112 | 112 | | (B) The performance indicators that the Legislature shall use to determine if the credit and exclusion are achieving the stated goal are the number of taxpayers allowed a credit or exclusion, and the total dollar amount of credits and exclusions allowed. |
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| 113 | 113 | | |
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| 114 | 114 | | (2) (A) On or before December 1, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of taxpayers allowed a credit pursuant to this section and Section 23632, and the total dollar amount of credits allowed. |
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| 115 | 115 | | |
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| 116 | 116 | | (B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542. |
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| 117 | 117 | | |
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| 118 | 118 | | (j) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 119 | 119 | | |
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| 120 | 120 | | SEC. 2. Section 17139.4 is added to the Revenue and Taxation Code, to read:17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer.(b) For purposes of this section, the following definitions apply:(1) Full-time employee means an employee of a qualifying employer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) This section shall remain operative only until January 1, 2031, and as of that date is repealed. |
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| 121 | 121 | | |
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| 122 | 122 | | SEC. 2. Section 17139.4 is added to the Revenue and Taxation Code, to read: |
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| 123 | 123 | | |
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| 124 | 124 | | ### SEC. 2. |
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| 125 | 125 | | |
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| 126 | 126 | | 17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer.(b) For purposes of this section, the following definitions apply:(1) Full-time employee means an employee of a qualifying employer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) This section shall remain operative only until January 1, 2031, and as of that date is repealed. |
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| 127 | 127 | | |
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| 128 | 128 | | 17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer.(b) For purposes of this section, the following definitions apply:(1) Full-time employee means an employee of a qualifying employer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) This section shall remain operative only until January 1, 2031, and as of that date is repealed. |
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| 129 | 129 | | |
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| 130 | 130 | | 17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer.(b) For purposes of this section, the following definitions apply:(1) Full-time employee means an employee of a qualifying employer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) This section shall remain operative only until January 1, 2031, and as of that date is repealed. |
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| 131 | 131 | | |
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| 132 | 132 | | |
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| 133 | 133 | | |
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| 134 | 134 | | 17139.4. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any student loan payments made by a qualifying employer on behalf of a taxpayer that is a full-time employee of that qualifying employer. |
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| 135 | 135 | | |
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| 136 | 136 | | (b) For purposes of this section, the following definitions apply: |
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| 137 | 137 | | |
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| 138 | 138 | | (1) Full-time employee means an employee of a qualifying employer who satisfies either of the following: |
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| 139 | 139 | | |
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| 140 | 140 | | (A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week. |
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| 141 | 141 | | |
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| 142 | 142 | | (B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer. |
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| 143 | 143 | | |
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| 144 | 144 | | (2) Qualifying employer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code. |
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| 145 | 145 | | |
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| 146 | 146 | | (c) This section shall remain operative only until January 1, 2031, and as of that date is repealed. |
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| 147 | 147 | | |
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| 148 | 148 | | SEC. 3. Section 23632 is added to the Revenue and Taxation Code, to read:23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 149 | 149 | | |
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| 150 | 150 | | SEC. 3. Section 23632 is added to the Revenue and Taxation Code, to read: |
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| 151 | 151 | | |
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| 152 | 152 | | ### SEC. 3. |
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| 153 | 153 | | |
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| 154 | 154 | | 23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 155 | 155 | | |
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| 156 | 156 | | 23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 157 | 157 | | |
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| 158 | 158 | | 23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year.(b) For purposes of this section, the following definitions shall apply:(1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following:(A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week.(B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.(2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee.(3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code.(c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year.(d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section:(1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board.(2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following:(A) Businesses that are owned by veterans.(B) Businesses that are owned by women.(C) Employers that employ no more than 500 employees at any time during the taxable year.(D) Businesses that are minority owned.(E) Businesses that are owned by disabled individuals.(e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 159 | 159 | | |
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| 160 | 160 | | |
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| 161 | 161 | | |
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| 162 | 162 | | 23632. (a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, there shall be allowed as a credit against the tax, as that term is defined in Section 23036, of a qualified taxpayer an amount equal to the taxpayers qualified expenditures during the taxable year. |
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| 163 | 163 | | |
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| 164 | 164 | | (b) For purposes of this section, the following definitions shall apply: |
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| 165 | 165 | | |
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| 166 | 166 | | (1) Full-time employee means an employee of a qualified taxpayer who satisfies either of the following: |
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| 167 | 167 | | |
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| 168 | 168 | | (A) Is paid wages by the qualified taxpayer for services not fewer than an average of 35 hours per week. |
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| 169 | 169 | | |
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| 170 | 170 | | (B) Is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer. |
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| 171 | 171 | | |
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| 172 | 172 | | (2) Qualified expenditure means all student loan payments made by a qualified taxpayer on behalf of a full-time employee, not to exceed three thousand dollars ($3,000) per full-time employee. |
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| 173 | 173 | | |
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| 174 | 174 | | (3) Qualified taxpayer means a business whose employees do not perform jobs described in Section 1087e(m)(3)(B) of Title 20 of the United States Code. |
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| 175 | 175 | | |
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| 176 | 176 | | (c) The total aggregate amount that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.83 shall not exceed twenty-five million dollars ($25,000,000) per calendar year. |
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| 177 | 177 | | |
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| 178 | 178 | | (d) The Franchise Tax Board shall do the following in relation to the credit allowed by this section: |
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| 179 | 179 | | |
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| 180 | 180 | | (1) Beginning on July 1 of each year, accept applications from taxpayers for a tentative credit reservation for the taxable year that includes January 1 of the calendar year following that date. Applications shall be made in the form and manner prescribed by the Franchise Tax Board. |
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| 181 | 181 | | |
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| 182 | 182 | | (2) Approve applications, giving priority to those applications submitted by qualified taxpayers that are at least one of the following: |
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| 183 | 183 | | |
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| 184 | 184 | | (A) Businesses that are owned by veterans. |
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| 185 | 185 | | |
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| 186 | 186 | | (B) Businesses that are owned by women. |
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| 187 | 187 | | |
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| 188 | 188 | | (C) Employers that employ no more than 500 employees at any time during the taxable year. |
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| 189 | 189 | | |
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| 190 | 190 | | (D) Businesses that are minority owned. |
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| 191 | 191 | | |
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| 192 | 192 | | (E) Businesses that are owned by disabled individuals. |
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| 193 | 193 | | |
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| 194 | 194 | | (e) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by the Franchise Tax Board. |
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| 195 | 195 | | |
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| 196 | 196 | | (f) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year, and the three succeeding years if necessary, until the credit is exhausted. |
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| 197 | 197 | | |
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| 198 | 198 | | (g) If the credit allowed by this section is claimed by the qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditure made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section. |
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| 199 | 199 | | |
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| 200 | 200 | | (h) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. |
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| 201 | 201 | | |
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| 202 | 202 | | (i) The section shall remain operative only until December 1, 2031, and as of that date is repealed. |
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| 203 | 203 | | |
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| 204 | 204 | | SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 205 | 205 | | |
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| 206 | 206 | | SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 207 | 207 | | |
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| 208 | 208 | | SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 209 | 209 | | |
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| 210 | 210 | | ### SEC. 4. |
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