The California General Assembly has sent several stimulus and tax-related bills to the Governor for his expected signature.
SB 139 authorizes a second round of Golden State Stimulus payments of up to $1,100 to taxpayers with California AGI of $75,000 or less. The exact amount is dependent on the taxpayer’s income and immigration status, and whether the taxpayer has dependents.
AB 150 contains numerous tax relief provisions, including but not limited to:
- An elective passthrough entity tax of 9.3% for qualified S corporations and partnerships, and LLCs taxed as S corporations or partnerships for the 2021 through 2025 taxable years. The tax is imposed on the consenting shareholders’/partners’ passthrough income and consenting owners may claim a credit equal to their portion of the passthrough entity tax paid. This is an IRS-sanctioned workaround to the $10,000 SALT deduction limitation;
- Reenactment and expansion of the Main Street Hiring Credit against income, franchise, or sales and use taxes for the 2021 taxable year. It allows employers with 500 or fewer employees and a 20% decline in gross receipts from 2019 to 2020 to claim a credit of up to $1,000 per net increase in full-time equivalent employees; and
- A new income and franchise Homeless Person Hiring Credit of between $2,500 per $10,000 per homeless person hired, depending on the amount of hours worked. The credit is available for the 2022 through 2027 taxable years
AB 128 (Ch. 21-21) and SB 151 expand upon and provide a variety of new grants, including:
- An additional $1.5 billion for California COVID relief grants (see https://careliefgrant.com/ for more info) and additional rounds of funding for nonprofit cultural institutions;
- A new California Competes Grants program for businesses that create at least 500 new full-time jobs, make at least $10 million in infrastructure investments, or create jobs or invest in a high unemployment area. AB 129 authorizes $120 million for the program for the 2021–22 fiscal year; and
- New grant programs for live performance (including sports) venues, nonprofit performing arts programs, and California microbusinesses impacted by COVID-19.
For more information on these new bills see the August issue of Spidell’s California Taxletter®.
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