Bill > SB302

This bill updates California's tax code to align with the federal Inflation Reduction Act of 2022 by excluding certain environmental and clean energy tax credits from gross income for both personal and corporate income tax purposes. Specifically, for tax years beginning on or after January 1, 2023, the bill allows taxpayers to exclude from gross income payments related to two key federal tax credit mechanisms: direct pay credits (Section 6417) and transferable credits (Section 6418). Under these provisions, entities can either receive direct payments for clean energy credits or transfer the credits to other taxpayers, with the transferee prohibited from deducting the amount paid for the transfer. The bill is part of California's broader climate strategy to achieve a net-zero carbon economy by 2045, with goals of increasing renewable energy to 100% of retail electricity sales by 2045 and significantly reducing fossil fuel consumption. To track the effectiveness of these tax provisions, the Franchise Tax Board is required to submit a report to the Legislature by November 1, 2029, detailing how these tax credit mechanisms are being utilized, with the reporting requirement set to expire on January 1, 2037. The Legislature emphasizes that these tax code changes are intended to promote investment in clean energy projects and advanced manufacturing facilities in California.

Budget and Finance

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