AB 132 and SB 132 were introduced on June 24, 2025, as part of the larger budget deal being negotiated in Sacramento between California legislators and the Governor. Key items included in the bills are provisions that would:
- Extend the passthrough entity elective tax and Passthrough Entity Elective Tax Credit for an additional five years if the federal SALT limitation is extended. During this extended period, entities that do not make the required June 15 prepayment would still be able to make the election, but the amount of credit that could be claimed by the owners would be reduced by 12.5%;
- Enact a new $20,000 military retirement pay exclusion for taxpayers with AGI of $125,000 or less ($250,000 MFJ and surviving spouses);
- Exclude wildfire settlements received from a class action settlement administrator during the 2021 through 2030 taxable years; and
- More than double the allocation available for the Motion Picture and Television Credits.
We will provide updates concerning these bills as they move through the legislative process.
Sign up for Spidell’s Quarterly Tax Update and get the latest information on California’s budget bill and other legislation. Click here and register today.
Sign up for Spidell’s Flash E-mail — Get breaking news delivered to your inbox, plus other free analysis and information for tax professionals. Join our community and stay at the top of your game. Click here to sign up.
