Bill > SB302

This bill updates California's tax code to align with the federal Inflation Reduction Act's clean energy tax credit provisions for taxable years between January 1, 2026, and January 1, 2031. Specifically, the bill excludes from gross income certain refund payments and credit transfer payments related to federal environmental credits, following the mechanisms of Sections 6417 and 6418 of the Internal Revenue Code. Under these provisions, entities can receive direct payments for clean energy credits (known as "direct pay") and can also transfer the value of these credits to other taxpayers. The bill prohibits transferees from deducting the amount paid for credit transfers, mirroring federal law. To ensure accountability, the Franchise Tax Board is required to report to the Legislature by November 1, 2029, providing data on how these tax provisions are being used to promote clean energy project investments in California. The bill's broader context is California's ambitious climate goals, including achieving a net-zero carbon economy by 2045 and significantly reducing fossil fuel consumption, with this tax provision intended to support and accelerate clean energy development by making environmental credits more financially attractive.

Budget and Finance

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260SB302