Bill > SB573

This bill makes several important changes to California's corporation tax structure, primarily focusing on publicly held corporations. Starting January 1, 2026, the bill would establish a graduated tax rate system for publicly held corporations ranging from 7% to 13%, which would be determined by the corporation's "compensation ratio" - a calculation comparing the compensation of the highest-paid employee to the median employee compensation. The tax rate would increase as the compensation ratio increases. Additionally, the bill introduces a penalty provision that would increase the applicable tax rate by 50% for corporations that reduce their full-time US employees by more than 10% while simultaneously increasing contracted or foreign employees. The bill also extends an existing tax exclusion for guaranteed income pilot program payments from July 1, 2026, to July 1, 2031, providing continued financial relief to vulnerable Californians. Notably, the bill requires a supermajority legislative approval (23 votes in each house) because it results in potential higher tax payments for corporations. The bill takes effect immediately as a tax levy and aims to create incentives for corporations to maintain their US workforce while addressing income inequality through its tax rate structure.

Budget and Finance

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260SB573