SB 132 (Ch. 25-17) was signed by the Governor on June 27, 2025, as part of the larger budget deal negotiated between California legislators and the Governor. As we reported earlier, key items included in the bill are provisions that:
- 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 can be claimed by the owners would be reduced by 12.5%. Note: Under both the House and Senate versions of the One Big, Beautiful Bill Act under consideration, the SALT limitation would be extended, but at higher amounts;
- Enact a new $20,000 military retirement pay exclusion for taxpayers with AGI of $125,000 or less ($250,000 MFJ and surviving spouses) for the 2025 through 2029 tax years;
- 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 further details in an upcoming issue of Spidell’s California Taxletter.®
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