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

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

(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.

Sponsors

Sponsors by party (alphabetical): Democratic 6

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 30, 2026Chaptered by Secretary of State - Chapter 849, Statutes of 2026.
2. September 30, 2026Approved by the Governor.
3. September 15, 2026Enrolled and presented to the Governor at 3 p.m.
4. August 31, 2026Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 59. Noes 15. Page 6983.).
5. August 30, 2026In Assembly. Concurrence in Senate amendments pending.
6. August 30, 2026Read third time. Passed. Ordered to the Assembly. (Ayes 29. Noes 10.).
7. August 28, 2026Read second time. Ordered to third reading.
8. August 27, 2026Read third time and amended. Ordered to second reading.
9. August 24, 2026Read second time. Ordered to third reading.
10. August 21, 2026Read second time and amended. Ordered returned to second reading.
11. August 20, 2026Read third time and amended. Ordered to second reading.
12. August 13, 2026Read second time. Ordered to third reading.