AMENDED IN ASSEMBLY MARCH 11, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

98

TAX LEVY

Introduced by Assembly Member Tangipa

(Coauthors: Assembly Members Alanis, Castillo, Gallagher, Hadwick, and Macedo)

February 20, 2026

An act to add and repeal Sections 17053.66 and 23668 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: yes

LEGISLATIVE COUNSEL’S DIGEST

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would allow a credit against the taxes imposed by those laws for specified agricultural businesses that operate on at least 50 acres of land, as provided, equal to 25% of the business’s qualified expenditures, as defined. The bill would increase the credit by 5% to 30% of qualified expenditures if the taxpayer purchases specified low-emission equipment or the qualified taxpayer has qualified expenditures are related to the taxpayer’s related to operations in a high or very high fire hazard severity zone, as specified. The bill would limit the credit to no more than $1,000,000. The bill would cap the aggregate amount of the credit allowed at $250,000,000 for each taxable year, and would require a taxpayer to request a credit reservation from the Department of Food and Agriculture, as provided. The bill would require the Department of Food and Agriculture to coordinate with the Franchise Tax Board for the administration of the credit. The bill would require the Franchise Tax Board and the Department of Food and Agriculture to share specified information, and would make the unauthorized disclosure of that information a misdemeanor. By expanding the scope of a crime, this bill would impose a state-mandated local program.

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

This bill would also include additional information required for any bill authorizing a new tax expenditure.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would take effect immediately as a tax levy.

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

SECTION 1.

Section 17053.66 is added to the Revenue and Taxation Code, to read:

17053.66.

(a) (1) For each taxable year 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 equal to 25 percent of the total amount of the qualified taxpayer’s qualified expenditures during the taxable year, except as provided in paragraph (2). paragraphs (2) and (3).

(2) For any taxable year, the credit allowed under paragraph (1) shall be increased by an additional 5 to 30 percent of qualified expenditures if either of the following conditions are met:

(A) The qualified taxpayer purchases low-emission equipment, as defined in paragraph (1) of subdivision (b), during the taxable year.

(B) The qualified taxpayer has qualified expenditures are related to the qualified taxpayer’s related to operations in a high or very high fire hazard severity zone as identified by the State Fire Marshal pursuant to Section 51178 of the Government Code.

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

(1) “Agricultural production” means the production of agricultural commodities, including, but not limited to, crops, specialty crops, livestock, dairy, poultry, aquaculture, and mixed agricultural operations.

(2) “Low-emission equipment” means off-road equipment with a motor that satisfies the requirements of Section 2423 of Title 13 of the California Code of Regulations.

(3) “Qualified expenditure” means costs related to all of the following:

(A) Wages and labor, including wages paid to seasonal and temporary employees.

(B) Infrastructure and equipment.

(C) Agricultural production.

(4) “Qualified taxpayer” means a taxpayer that operates on at least 50 acres of land, regardless of whether the taxpayer owns or leases the land, and is primarily involved in one or more business described in codes 111110 to 112519, inclusive, of the 2022 edition of the North American Industry Classification System, published by the United States Office of Management and Budget.

(c) The total aggregate amount of the credit that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 23668 shall not exceed two hundred fifty million dollars ($250,000,000) for each taxable year, cumulatively.

(d) (1) To be eligible for the credit allowed by this section, a qualified taxpayer shall request a credit reservation from the Department of Food and Agriculture during the month of July for each taxable year, or within 30 days of the start of their taxable year if the qualified taxpayer’s taxable year begins after July, in the form and manner prescribed by the Department of Food and Agriculture in coordination with the Franchise Tax Board.

(2) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by Department of Food and Agriculture in coordination with the Franchise Tax Board.

(3) The Department of Food and Agriculture, in coordination with the Franchise Tax Board, shall approve tentative credit reservations with respect to qualified expenditures incurred during a taxable year by qualified taxpayers, subject to the cap established under this section and Section 23668, and provide a credit certificate to the taxpayer upon approval, which is to be filed with the qualified taxpayer’s return for the taxable year in which the credit is claimed.

(4) (A) Notwithstanding any other law, the Franchise Tax Board and the Department of Food and Agriculture shall provide additional information, as requested by the Franchise Tax Board or Department of Food and Agriculture, as necessary to administer the credit allowed by this section.

(B) The information received by the Department of Food and Agriculture pursuant to this paragraph shall be considered confidential taxpayer information, and shall be subject to the provisions of Section 19542.

(e) (1) In the event the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and succeeding five four years if necessary, until the credit is exhausted.

(2) No deduction shall be allowed under this part for amounts taken into account under this section in calculating the credit allowed by this section.

(f) (1) For purposes of complying with Section 41, the Legislature finds and declares both of the following:

(A) The goal of the credit allowed pursuant to this section and Section 23668 is to ____.

(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit pursuant to this section and Section 23668 and the total dollar value of credits allowed.

(2) (A) The Franchise Tax Board shall, no later than April 1, 2029, and annually thereafter, submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit pursuant to this section and Section 23668 and the total dollar value of credits allowed.

(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.

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

SEC. 2.

Section 23668 is added to the Revenue and Taxation Code, to read:

23668.

(a) (1) For each taxable year 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 equal to 25 percent of the total amount of the qualified taxpayer’s qualified expenditures during the taxable year, except as provided in paragraph (2). paragraphs (2) and (3).

(2) For any taxable year, the credit allowed under paragraph (1) shall be increased by an additional 5 to 30 percent of qualified expenditures if either of the following conditions are met:

(A) The qualified taxpayer purchases low-emission equipment, as defined in paragraph (1) of subdivision (b), during the taxable year.

(B) The qualified taxpayer has qualified expenditures are related to the qualified taxpayer’s related to operations in a high or very high fire hazard severity zone as identified by the State Fire Marshal pursuant to Section 51178 of the Government Code.

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

(1) “Agricultural production” means the production of agricultural commodities, including, but not limited to, crops, specialty crops, livestock, dairy, poultry, aquaculture, and mixed agricultural operations.

(2) “Low-emission equipment” means off-road equipment with a motor that satisfies the requirements of Section 2423 of Title 13 of the California Code of Regulations.

(3) “Qualified expenditure” means costs related to all of the following:

(A) Wages and labor, including wages paid to seasonal and temporary employees.

(B) Infrastructure and equipment.

(C) Agricultural production.

(4) “Qualified taxpayer” means a taxpayer that operates on at least 50 acres of land, regardless of whether the taxpayer owns or leases the land, and is primarily involved in one or more business described in codes 111110 to 112519, inclusive, of the 2022 edition of the North American Industry Classification System, published by the United States Office of Management and Budget.

(c) The total aggregate amount of the credit that may be allocated by credit reservations to all qualified taxpayers pursuant to this section and Section 17053.66 shall not exceed two hundred fifty million dollars ($250,000,000) for each taxable year, cumulatively.

(d) (1) To be eligible for the credit allowed by this section, a qualified taxpayer shall request a credit reservation from the Department of Food and Agriculture during the month of July for each taxable year, or within 30 days of the start of their taxable year if the qualified taxpayer’s taxable year begins after July, in the form and manner prescribed by the Department of Food and Agriculture in coordination with the Franchise Tax Board.

(2) To obtain a credit reservation with respect to a qualified expenditure, the qualified taxpayer shall provide all necessary information, as determined by Department of Food and Agriculture in coordination with the Franchise Tax Board.

(3) The Department of Food and Agriculture, in coordination with the Franchise Tax Board, shall approve tentative credit reservations with respect to qualified expenditures incurred during a taxable year by qualified taxpayers, subject to the cap established under this section and Section 17053.66, and provide a credit certificate to the taxpayer upon approval, which is to be filed with the qualified taxpayer’s return for the taxable year in which the credit is claimed.

(4) (A) Notwithstanding any other law, the Franchise Tax Board and the Department of Food and Agriculture shall provide additional information, as requested by the Franchise Tax Board or Department of Food and Agriculture, as necessary to administer the credit allowed by this section.

(B) The information received by the Department of Food and Agriculture pursuant to this paragraph shall be considered confidential taxpayer information, and shall be subject to the provisions of Section 19542.

(e) (1) In the event the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding five four years if necessary, until the credit is exhausted.

(2) No deduction shall be allowed under this part for amounts taken into account under this section in calculating the credit allowed by this section.

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

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.

SEC. 4.

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.