AB 2222 (2025) — Personal Income Tax Law and Corporation Tax Law: credits: local news outlets: business expense deduction: excessive employee remuneration.

AMENDED IN SENATE AUGUST 21, 2026

AMENDED IN SENATE AUGUST 20, 2026

AMENDED IN SENATE JUNE 29, 2026

AMENDED IN SENATE JUNE 17, 2026

AMENDED IN ASSEMBLY MAY 22, 2026

AMENDED IN ASSEMBLY MAY 21, 2026

AMENDED IN ASSEMBLY APRIL 22, 2026

AMENDED IN ASSEMBLY MARCH 9, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

ASSEMBLY BILLNo. 2222

Introduced by Assembly Members Ward and Wicks

(Coauthors: Assembly Members Lowenthal, McKinnor, and Quirk-Silva)

February 19, 2026

An act to amend Sections 17039, 17271, 23036, and 24343 of, and to add and repeal Sections 17053.76 and 23633 of, the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.

Vote: 2/3 Appropriation: yes Fiscal committee: yes Local program: no

LEGISLATIVE COUNSEL’S DIGEST

(1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including a credit for specified new hiring and employment. Existing law establishes the continuously appropriated Tax Relief and Refund Account and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account. Existing law also establishes the continuously appropriated Corporation Tax Fund in the State Treasury for the purpose of making refunds pursuant to existing law.

This bill would, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, allow a credit against those taxes to a qualified taxpayer, as defined, equal to $20,000 for each qualifying journalist, as defined, continuously employed on a full-time basis by the taxpayer, not to exceed 5 qualifying journalists. The bill would also allow a credit of $15,000 for each qualifying journalist continuously employed on a full-time basis by the taxpayer in excess of 5 qualifying journalists, and a credit of $7,500 for each qualifying journalist employed on a part-time basis by the taxpayer. The bill would allow an additional credit of $15,000 for each qualifying journalist employed on a full-time basis in a new journalism position, as defined. The bill would require the amount of the credit exceeding the taxpayer’s liability to be credited against other amounts due, if any, and would require the balance to be paid from the Tax Relief and Refund Account or the Corporation Tax Fund, as specified, and refunded to the taxpayer. By increasing the payments from the Tax Relief and Refund Account and the Corporation Tax Fund, which are continuously appropriated funds, the bill would make an appropriation. The bill would allow the credit to organizations that are exempt from income taxation, as specified, and would allow the refund provisions to apply for those organizations.

Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, to contain, among other things, specific goals that the tax credit will achieve, detailed performance indicators, and data collection requirements.

This bill also would include additional information required for any bill authorizing a new tax expenditure. The bill would also require the Franchise Tax Board to publish a report on its internet website detailing the total number of taxpayers allowed the credit, the total dollar value of credits allowed, and the average dollar amount per qualified taxpayer allowed a credit. The bill would require the Franchise Tax Board to submit a report to the Legislature providing guidance on potential administration and enforcement of a refundable tax credit for organizations exempt from federal income tax, as provided.

(2) Under the Personal Income Tax Law and the Corporation Tax Law, various provisions of the federal Internal Revenue Code, as enacted as of a specified date, are referenced in various sections of the Revenue and Taxation Code. Those laws provide that, for taxable years beginning on or after January 1, 2025, the specified date of those referenced Internal Revenue Code sections is January 1, 2025, unless otherwise specifically provided.

The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal income tax laws, allow various deductions from gross income in calculating adjusted gross income, including a deduction for the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Existing law does not allow a deduction as an ordinary and necessary business expense for the wages or other remuneration of a covered employee, as defined, to the extent that remuneration exceeds $1,000,000. Existing federal income tax law, enacted after January 1, 2025, amends the application of the limitations relating to covered employees in the case of taxpayers that are members of a controlled group.

This bill would specifically conform to the federal application of the limitations relating to covered employees in the case of taxpayers that are members of a controlled group for state tax purposes. The bill would also further conform to the federal definition of a covered employee.

The people of the State of California do enact as follows:

SECTION 1.

Section 17039 of the Revenue and Taxation Code is amended to read:

17039.

(a) Notwithstanding any provision in this part to the contrary, for the purposes of computing tax credits, the term “net tax” means the tax imposed under either Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to lump-sum distributions) less the credits allowed by Section 17054 (relating to personal exemption credits) and any amount imposed under paragraph (1) of subdivision (d) and paragraph (1) of subdivision (e) of Section 17560. Notwithstanding the preceding sentence, the “net tax” shall not be less than the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions), if any. Credits shall be allowed against “net tax” in the following order:

(1) Credits that do not contain carryover or refundable provisions, except those described in paragraphs (4) and (5).

(2) Credits that contain carryover provisions but do not contain refundable provisions, except for those that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062.

(3) Credits that contain both carryover and refundable provisions, except the credit described in paragraph (10).

(4) The minimum tax credit allowed by Section 17063 (relating to the alternative minimum tax).

(5) (A) For taxable years beginning on or after January 1, 2002, and before January 1, 2022, credits that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062.

(B) For taxable years beginning on or after January 1, 2022, credits that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062, except the credits described in paragraphs (7), (8), (10), (11), and (12).

(6) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).

(7) For taxable years beginning on or after January 1, 2022, the credit allowed by Section 17052.10 (relating to the elective tax under the Small Business Relief Act).

(8) For taxable years beginning on or after January 1, 2026, the credit allowed by Section 17052.11 (relating to the elective tax under the Small Business Relief Act).

(9) Credits that contain refundable provisions but do not contain carryover provisions, except the credits described in paragraphs (11) and (12).

(10) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 17053.98.1.

(11) For taxable years beginning on or after January 1, 2027, the credit allowed by Section 17039.5.

(12) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, the credit allowed by Section 17053.76.

(13) The credits provided by Sections 17061 (relating to refunds pursuant to the Unemployment Insurance Code) and 19002 (relating to tax withholding).

(b) The order within each paragraph of subdivision (a) shall be determined by the Franchise Tax Board.

(c) (1) Notwithstanding any other provision of this part, no tax credit shall reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions) below the tentative minimum tax, as defined by Section 17062, except the following credits:

(A) The credit allowed by former Section 17052.2 (relating to teacher retention tax credit, repealed on August 24, 2007).

(B) The credit allowed by former Section 17052.4 (relating to solar energy, repealed on December 1, 1989).

(D) The credit allowed by former Section 17052.5 (relating to solar energy, repealed on December 1, 1994).

(E) The credit allowed by Section 17052.12 (relating to research expenses).

(F) The credit allowed by former Section 17052.13 (relating to sales and use tax credit, repealed on January 1, 1997).

(G) The credit allowed by former Section 17052.15 (relating to Los Angeles Revitalization Zone sales tax credit, repealed on December 1, 1998).

(H) The credit allowed by Section 17052.25 (relating to the adoption costs credit).

(I) The credit allowed by Section 17053.5 (relating to the renter’s credit).

(J) The credit allowed by former Section 17053.8 (relating to enterprise zone hiring credit, repealed on October 3, 1997).

(K) The credit allowed by former Section 17053.10 (relating to Los Angeles Revitalization Zone hiring credit, repealed on December 1, 1998).

(L) The credit allowed by former Section 17053.11 (relating to program area hiring credit, repealed on January 1, 1997).

(M) For each taxable year beginning on or after January 1, 1994, the credit allowed by former Section 17053.17 (relating to Los Angeles Revitalization Zone hiring credit, repealed on December 1, 1998).

(N) The credit allowed by former Section 17053.33 (relating to targeted tax area sales or use tax credit, repealed on December 1, 2015).

(O) The credit allowed by former Section 17053.34 (relating to targeted tax area hiring credit, repealed on December 1, 2019).

(P) The credit allowed by former Section 17053.49 (relating to qualified property, repealed on January 1, 2004).

(Q) The credit allowed by former Section 17053.70 (relating to enterprise zone sales or use tax credit, repealed on December 1, 2015).

(R) The credit allowed by former Section 17053.74 (relating to enterprise zone hiring credit, repealed on December 1, 2019).

(S) The credit allowed by Section 17054 (relating to credits for personal exemption).

(T) The credit allowed by Section 17054.5 (relating to the credits for a qualified joint custody head of household and a qualified taxpayer with a dependent parent).

(U) The credit allowed by Section 17054.7 (relating to the credit for a senior head of household).

(V) The credit allowed by former Section 17057 (relating to clinical testing expenses, repealed on December 1, 1993).

(W) The credit allowed by Section 17058 (relating to low-income housing).

(X) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 17059.2 (relating to GO-Biz California Competes Credit).

(Y) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code).

(Z) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).

(AA) The credit allowed by Section 19002 (relating to tax withholding).

(AB) For taxable years beginning on or after January 1, 2014, the credit allowed by former Section 17053.86 (relating to the College Access Tax Credit Fund, repealed on December 1, 2017).

(AC) For taxable years beginning on or after January 1, 2017, the credit allowed by Section 17053.87 (relating to the College Access Tax Credit Fund).

(AD) For taxable years beginning on or after January 1, 2021, the credit allowed by Section 17052.10 (relating to the elective tax under the Small Business Relief Act).

(AE) For taxable years beginning on or after January 1, 2020, the credit allowed by Section 17053.98 (relating to the California Motion Picture and Television Production Credit).

(AF) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 17053.98.1 (relating to the California Motion Picture and Television Production Credit).

(AG) For taxable years beginning on or after January 1, 2027, the credit allowed by Section 17039.5.

(AH) For taxable years beginning on or after January 1, 2026, the credit allowed by Section 17052.11 (relating to the elective tax under the Small Business Relief Act).

(AI) For taxable years beginning on or after January 1, 2026, and before January 1, 2036, the credit allowed by Section 17053.40 (relating to eligible transmission projects).

(AJ) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, the credit allowed by Section 17053.76 (relating to local news ~~organizations).~~ outlets).

(2) Any credit that is partially or totally denied under paragraph (1) shall be allowed to be carried over and applied to the net tax in succeeding taxable years, if the provisions relating to that credit include a provision to allow a carryover when that credit exceeds the net tax.

(d) Unless otherwise provided, any remaining carryover of a credit allowed by a section that has been repealed or made inoperative shall continue to be allowed to be carried over under the provisions of that section as it read immediately before being repealed or becoming inoperative.

(e) (1) Unless otherwise provided, if two or more taxpayers (other than spouses) share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to the taxpayer’s respective share of the costs paid or incurred.

(2) In the case of a partnership, the credit shall be allocated among the partners pursuant to a written partnership agreement in accordance with Section 704 of the Internal Revenue Code, relating to partner’s distributive share.

(3) In the case of spouses who file separate returns, the credit may be taken by either or equally divided between them.

(f) Unless otherwise provided, in the case of a partnership, any credit allowed by this part shall be computed at the partnership level, and any limitation on the expenses qualifying for the credit or limitation upon the amount of the credit shall be applied to the partnership and to each partner.

(g) (1) With respect to any taxpayer that directly or indirectly owns an interest in a business entity that is disregarded for tax purposes pursuant to Section 23038 and any regulations thereunder, the amount of any credit or credit carryforward allowable for any taxable year attributable to the disregarded business entity shall be limited in accordance with paragraphs (2) and (3).

(2) The amount of any credit otherwise allowed under this part, including any credit carryover from prior years, that may be applied to reduce the taxpayer’s “net tax,” as defined in subdivision (a), for the taxable year shall be limited to an amount equal to the excess of the taxpayer’s regular tax (as defined in Section 17062), determined by including income attributable to the disregarded business entity that generated the credit or credit carryover, over the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to that disregarded business entity. A credit shall not be allowed if the taxpayer’s regular tax (as defined in Section 17062), determined by including the income attributable to the disregarded business entity, is less than the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to the disregarded business entity.

(3) If the amount of a credit allowed pursuant to the section establishing the credit exceeds the amount allowable under this subdivision in any taxable year, the excess amount may be carried over to subsequent taxable years pursuant to subdivisions (c) and (d).

(h) (1) Unless otherwise specifically provided, in the case of a taxpayer that is a partner or shareholder of an eligible pass-thru entity described in paragraph (2), any credit passed through to the taxpayer in the taxpayer’s first taxable year beginning on or after the date the credit is no longer operative may be claimed by the taxpayer in that taxable year, notwithstanding the repeal of the statute authorizing the credit before the close of that taxable year.

(2) For purposes of this subdivision, “eligible pass-thru entity” means any partnership or “S” corporation that files its return on a fiscal year basis pursuant to Section 18566, and that is entitled to a credit pursuant to this part for the taxable year that begins during the last year the credit is operative.

(3) This subdivision applies to credits that become inoperative on or after January 1, 2002.

(i) The amendments made to this section by Chapter 3 of the Statutes of 2022 shall apply as follows:

(1) The amendments to subdivisions (a), (e), and (h) shall be operative for taxable years beginning on or after January 1, 2022.

(2) The amendments to subdivision (c) shall be operative for taxable years beginning on or after January 1, 2021.

(j) The amendments made to this section by Chapter 56 of the Statutes of 2023 shall apply as follows:

(1) The amendments to paragraphs (3), (5), and (9) of subdivision (a) shall be operative for taxable years beginning on or after January 1, 2025.

(2) The amendments to subparagraph (AE) of paragraph (1) of subdivision (c) shall be operative for taxable years beginning on or after January 1, 2020.

(3) The amendments to subparagraph (AF) of paragraph (1) of subdivision (c) shall be operative for taxable years beginning on or after January 1, 2025.

SEC. 2.

Section 17053.76 is added to the Revenue and Taxation Code, to read:

17053.76.

(a) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer an amount equal to the sum of the following:

(1) Twenty thousand dollars ($20,000) for each qualifying journalist continuously employed on a full-time basis by the qualified taxpayer, not to exceed five qualifying journalists.

(2) Fifteen thousand dollars ($15,000) for each qualifying journalist continuously employed on a full-time basis in excess of five employed by the qualified taxpayer.

(3) An additional fifteen thousand dollars ($15,000) for each qualifying journalist employed on a full-time basis in a new journalism position.

(4) An additional seven thousand five hundred dollars ($7,500) for each qualifying journalist employed on a part-time basis by the qualified taxpayer.

(b) For purposes of this section, the following definitions shall apply:

(1) “Annualized wages, salary, or passthrough income” means the wages, salary, or passthrough income paid to or earned by the individual for qualifying employment during the taxable year, divided by the number of weeks of that employment during the taxable year, multiplied by 52.

(2) “Continuously employed” means the journalist was employed by the qualified taxpayer, or by a qualified taxpayer of the same combined reporting group as the qualified taxpayer, in both of the following:

(A) The preceding taxable year on a full-time basis.

(B) The taxable year in which this credit is claimed.

(3) “Local news outlet” means a qualifying digital news outlet, qualifying broadcast station, or qualifying print publication that produces original news coverage concerning local communities in the state.

(4) “New journalism position” means the difference, but not below zero, of the value calculated in subparagraph (A) less the value calculated in subparagraph (B).

(A) The average number of qualifying journalists employed by the qualified taxpayer, or by any trade or business acquired by the qualified taxpayer during the taxable year, per day during the taxable year, rounded to the nearest whole number.

(B) The average number of qualifying journalists employed by the qualified taxpayer, or by any trade or business acquired by the qualified taxpayer during the taxable year, per day during the prior taxable year, rounded to the nearest whole number.

(5) “On a full-time basis” means employed by, or is the sole proprietor of, a qualified taxpayer on a full-time basis of at least 30 hours per week for more than 26 weeks, with annualized wages, salary, or passthrough income of no less than thirty-five thousand dollars ($35,000) during the taxable year.

(6) “On a part-time basis” means employed by a qualified taxpayer for at least 20 hours per week but less than 30 hours per week for more than 26 weeks, with annualized wages or salary of no less than twenty-five thousand dollars ($25,000) during the taxable year.

(7) “Qualified taxpayer” means a person or entity engaged in a trade or business within California that owns or operates a local news outlet that satisfies all of the following:

(A) Is organized in this state, or legally registered to conduct business within this state, for at least 12 months prior to the start of the taxable year.

(B) Publicly discloses all of its beneficial owners, or its board of directors if the taxpayer is a nonprofit entity, on its internet website or in its publication.

(D) Maintains and publicly displays an editorial policy for error correction and clarification that includes an accessible process for reporting errors and complaints.

(E) Is not controlled, directly or indirectly through one or more intermediaries, by a disqualified organization. For purposes of this subparagraph, a “disqualified organization” is either of the following:

(i) A political action committee or other entity described in Section 527 of the Internal Revenue Code.

(ii) An organization that is exempt from federal income taxation pursuant to Section 501(c)(4) of the Internal Revenue Code.

(8) “Qualifying broadcast station” means a broadcast station that satisfies either of the following:

(A) Is licensed to a community of license located within the state by the Federal Communications Commission pursuant to Section 307 of Title 47 of the United States Code.

(B) Is a nonprofit organization exempt from federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code and satisfies either of the following:

(i) Received a community service grant from the Corporation for Public Broadcasting prior to the 2025–26 fiscal year.

(ii) Employs qualifying journalists on behalf of a university-licensed public broadcaster.

(9) “Qualifying digital news outlet” means an entity that publishes news and information about the state or a local community within the state at least monthly during the taxable year and can demonstrate, with data on digital subscribers or traffic, to have at least 33 percent of its audience located within the state during the taxable year.

(10) “Qualifying journalist” means an individual that satisfies both of the following:

(A) Has primary job duties that occur in the state and consist of gathering, preparing, directing the recording of, producing, collecting, photographing, recording, writing, editing, reporting, presenting, or publishing state or local community news for dissemination to the local community, including roles such as reporter, correspondent, photographer, videographer, editor, and digital producer.

(B) Is a resident of this state, as defined in Section 17014.

(11) “Qualifying print publication” means either of the following:

(A) A local newspaper or news magazine publisher with periodicals mailing privileges from the United States Postal Service that publishes at least monthly during the taxable year and either maintains its known office of publication for the original entry for periodicals mailing privileges within the state or can demonstrate that at least 33 percent of its print distribution is to locations within the state during the taxable year.

(B) A newspaper of general circulation adjudicated by a California court, as described in Section 6008 of the Government Code.

(c) If the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the taxpayer.

(d) The credit allowed by this section shall be in lieu of any other credit allowed pursuant to this part in relation to the hiring or employment of any qualifying journalist or qualifying part-time journalist.

(e) (1) For purposes of complying with Section 41 as it relates to the credits allowed by this section and Section 23633, the Legislature finds and declares the following:

(A) The United States is estimated to have lost 75 percent of its local journalists since 2002, and the goal of the credits is to provide financial relief to local news media outlets that are struggling to maintain or grow local journalist employment.

(B) The performance indicators for the Legislature to use in determining whether the credits are achieving the stated goal shall be the total number of taxpayers allowed the credit, the total dollar value of credits allowed, and the average dollar amount per qualified taxpayer allowed a credit pursuant to this section and Section 23633.

(2) (A) (i) No later than April 1, 2029, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing the total number of taxpayers allowed the credit, the total dollar value of credits allowed, and the average dollar amount per qualified taxpayer allowed a credit pursuant to this section and Section 23633.

(ii) The Franchise Tax Board shall publish a version of the report described in subparagraph (A) on their internet website, while ensuring that any proprietary financial information regarding the operation of qualified taxpayers remains confidential.

(B) In addition to the report required pursuant to subparagraph (A), no later than January 1, 2028, the Franchise Tax Board shall issue guidance on administration and enforcement of a refundable tax credit for organizations exempt from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code, including the form and manner in which those organizations shall claim the credit and receive refunds.

(f) This section shall remain operative only until December 1, 2032, and as of that date is repealed.

SEC. 3.

Section 17271 of the Revenue and Taxation Code is amended to read:

17271.

(a) The amendments made to Section 162(m) of the Internal Revenue Code by Section 13601(e)(2) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), relating to exception for binding contracts, shall apply, and is modified by substituting “March 31, 2019” for “November 2, 2017.”

(b) Section 162(m)(3)(C) of the Internal Revenue Code shall apply.

SEC. 4.

Section 23036 of the Revenue and Taxation Code is amended to read:

23036.

(a) (1) The term “tax” includes any of the following:

(A) The tax imposed under Chapter 2 (commencing with Section 23101).

(B) The tax imposed under Chapter 3 (commencing with Section 23501).

(D) The tax on “S” corporations imposed under Section 23802.

(2) The term “tax” does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667.

(b) For purposes of Article 5 (commencing with Section 18661) of Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4, Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7 (commencing with Section 19501) of Part 10.2, and, for purposes of Sections 18601, 19001, and 19005, the term “tax” also includes all of the following:

(1) The tax on limited partnerships, imposed under Section 17935, the tax on limited liability companies, imposed under Section 17941, and the tax on registered limited liability partnerships and foreign limited liability partnerships imposed under Section 17948.

(2) The alternative minimum tax imposed under Chapter 2.5 (commencing with Section 23400).

(3) The tax on built-in gains of “S” corporations, imposed under Section 23809.

(4) The tax on excess passive investment income of “S” corporations, imposed under Section 23811.

(1) Credits that do not contain carryover provisions.

(2) Credits that, when the credit exceeds the “tax,” allow the excess to be carried over to offset the “tax” in succeeding taxable years, except for those credits that are allowed to reduce the “tax” below the tentative minimum tax, as defined by Section 23455. The order of credits within this paragraph shall be determined by the Franchise Tax Board.

(3) The minimum tax credit allowed by Section 23453.

(4) Credits that are allowed to reduce the “tax” below the tentative minimum tax, as defined by Section 23455, except the credit described in paragraph ~~(5).~~ (5), (6), and (7).

(5) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 23698.1.

(6) For taxable years beginning on or after January 1, 2027, the credit allowed by Section 23036.5.

(7) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, the credit allowed by Section 23633.

(8) Credits for taxes withheld under Section 18662.

(d) Notwithstanding any other provision of this part, each of the following applies:

(1) A credit may not reduce the “tax” below the tentative minimum tax (as defined by paragraph (1) of subdivision (a) of Section 23455), except the following credits:

(A) The credit allowed by former Section 23601 (relating to solar energy).

(B) The credit allowed by former Section 23601.4 (relating to solar energy).

(D) The credit allowed by Section 23609 (relating to research expenditures).

(E) The credit allowed by former Section 23609.5 (relating to clinical testing expenses).

(F) The credit allowed by Section 23610.5 (relating to low-income housing).

(G) The credit allowed by former Section 23612 (relating to sales and use tax credit).

(H) The credit allowed by Section 23612.2 (relating to enterprise zone sales or use tax credit).

(I) The credit allowed by former Section 23612.6 (relating to Los Angeles Revitalization Zone sales tax credit).

(J) The credit allowed by former Section 23622 (relating to enterprise zone hiring credit).

(K) The credit allowed by Section 23622.7 (relating to enterprise zone hiring credit).

(L) The credit allowed by former Section 23623 (relating to program area hiring credit).

(M) The credit allowed by former Section 23623.5 (relating to Los Angeles Revitalization Zone hiring credit).

(N) The credit allowed by former Section 23625 (relating to Los Angeles Revitalization Zone hiring credit).

(O) The credit allowed by former Section 23633 (relating to targeted tax area sales or use tax credit, repealed on December 1, 2015).

(P) The credit allowed by Section 23634 (relating to targeted tax area hiring credit).

(Q) The credit allowed by former Section 23649 (relating to qualified property).

(R) For taxable years beginning on or after January 1, 2011, the credit allowed by Section 23685 (relating to qualified motion pictures).

(S) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 23689 (relating to GO-Biz California Competes Credit).

(T) For taxable years beginning on or after January 1, 2016, the credit allowed by Section 23695 (relating to qualified motion pictures).

(U) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 23686 (relating to the College Access Tax Credit Fund).

(V) For taxable years beginning on or after January 1, 2017, the credit allowed by Section 23687 (relating to the College Access Tax Credit Fund).

(W) For taxable years beginning on or after January 1, 2020, and before January 1, 2031, the credit allowed by Section 23636 (relating to the new advanced strategic aircraft credit).

(X) For taxable years beginning on or after January 1, 2020, the credit allowed by Section 23698 (relating to the California Motion Picture and Television Production Credit).

(Y) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 23698.1 (relating to the California Motion Picture and Television Production Credit).

(Z) For taxable years beginning on or after January 1, 2027, the credit allowed by Section 23036.5.

(AA) For taxable years beginning on or after January 1, 2026, and before January 1, 2036, the credit allowed by Section 23640 (relating to eligible transmission projects).

(AB) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, the credit allowed by Section 23633 (relating to local news ~~organizations).~~ outlets).

(2) A credit against the tax may not reduce the minimum franchise tax imposed under Chapter 2 (commencing with Section 23101).

(e) Any credit which is partially or totally denied under subdivision (d) is allowed to be carried over to reduce the “tax” in the following year, and succeeding years if necessary, if the provisions relating to that credit include a provision to allow a carryover of the unused portion of that credit.

(f) Unless otherwise provided, any remaining carryover from a credit that has been repealed or made inoperative is allowed to be carried over under the provisions of that section as it read immediately prior to being repealed or becoming inoperative.

(g) Unless otherwise provided, if two or more taxpayers share in costs that would be eligible for a tax credit allowed under this part, each taxpayer is eligible to receive the tax credit in proportion to their respective share of the costs paid or incurred.

(h) Unless otherwise provided, in the case of an “S” corporation, any credit allowed by this part is computed at the “S” corporation level, and any limitation on the expenses qualifying for the credit or limitation upon the amount of the credit applies to the “S” corporation and to each shareholder.

(i) (1) With respect to any taxpayer that directly or indirectly owns an interest in a business entity that is disregarded for tax purposes pursuant to Section 23038 and any regulations thereunder, the amount of any credit or credit carryforward allowable for any taxable year attributable to the disregarded business entity is limited in accordance with paragraphs (2) and (3).

(2) The amount of any credit otherwise allowed under this part, including any credit carryover from prior years, that may be applied to reduce the taxpayer’s “tax,” as defined in subdivision (a), for the taxable year is limited to an amount equal to the excess of the taxpayer’s regular tax (as defined in Section 23455), determined by including income attributable to the disregarded business entity that generated the credit or credit carryover, over the taxpayer’s regular tax (as defined in Section 23455), determined by excluding the income attributable to that disregarded business entity. A credit is not allowed if the taxpayer’s regular tax (as defined in Section 23455), determined by including the income attributable to the disregarded business entity is less than the taxpayer’s regular tax (as defined in Section 23455), determined by excluding the income attributable to the disregarded business entity.

(j) (1) Unless otherwise specifically provided, in the case of a taxpayer that is a partner or shareholder of an eligible pass-thru entity described in paragraph (2), any credit passed through to the taxpayer in the taxpayer’s first taxable year beginning on or after the date the credit is no longer operative may be claimed by the taxpayer in that taxable year, notwithstanding the repeal of the statute authorizing the credit prior to the close of that taxable year.

(3) This subdivision applies to credits that become inoperative on or after the operative date of the act adding this subdivision.

(k) The amendments made to this section by Chapter 56 of the Statutes of 2023 shall apply as follows:

(1) The amendments to subdivision (c) shall be operative for taxable years beginning on or after January 1, 2025.

(2) The amendments to subparagraph (X) of paragraph (1) of subdivision (d) shall be operative for taxable years beginning on or after January 1, 2020.

(3) The amendments to subparagraph (Y) of paragraph (1) of subdivision (d) shall be operative for taxable years beginning on or after January 1, 2025.

SEC. 5.

Section 23633 is added to the Revenue and Taxation Code, to read:

23633.

(a) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer an amount equal to the sum of the following:

(1) Twenty thousand dollars ($20,000) for each qualifying journalist continuously employed on a full-time basis by the qualified taxpayer, not to exceed five qualifying journalists.

(2) Fifteen thousand dollars ($15,000) for each qualifying journalist continuously employed on a full-time basis in excess of five employed by the qualified taxpayer.

(3) An additional fifteen thousand dollars ($15,000) for each qualifying journalist employed on a full-time basis in a new journalism position.

(4) An additional seven thousand five hundred dollars ($7,500) for each qualifying journalist employed on a part-time basis by the qualified taxpayer.

(b) For purposes of this section, the following definitions shall apply:

(A) The preceding taxable year on a full-time basis.

(B) The taxable year in which this credit is claimed.

(4) “New journalism position” means the difference, but not below zero, of the value calculated in subparagraph (A) less the value calculated in subparagraph (B).

(7) “Qualified taxpayer” means a taxpayer engaged in a trade or business within California that owns or operates a local news outlet that satisfies all of the following:

(A) Is organized in this state, or legally registered to conduct business within this state, for at least 12 months prior to the start of the taxable year.

(B) Publicly discloses all of its beneficial owners, or its board of directors if the taxpayer is a nonprofit entity, on its internet website or in its publication.

(D) Maintains and publicly displays an editorial policy for error correction and clarification that includes an accessible process for reporting errors and complaints.

(i) A political action committee or other entity described in Section 527 of the Internal Revenue Code.

(ii) An organization that is exempt from federal income taxation pursuant to Section 501(c)(4) of the Internal Revenue Code.

(F) For purposes of this paragraph, “taxpayer” includes an organization exempt from taxation under this part pursuant to Article 1 (commencing with Section 23701) of Chapter 4, and the ownership and operation of a local news outlet by that organization that otherwise satisfies the requirements of this section constitutes engagement in a trade or business within California.