News and Insights

Update: California Sales Tax Exemption for Manufacturers Moves Forward

Tax Development May 13, 2022

Update: California Sales Tax Exemption for Manufacturers Moves Forward

In another step forward, California Assembly Bill 1951 was approved by the Assembly Revenue and Taxation Committee. The bill would expand the current partial exemption from state and local sales tax to a full exemption for most research and development equipment. The bill would also remove the cap limiting the partial exemption to equipment purchases under $200 million.

Although the favorable vote was unanimous in the Committee, challenges still remain in including the changes necessary to address the useful life language of eligible purchases. The proponents of the bill seek to change the useful life to correspond to federal guidelines. 

The legislative budget committee chairs are requesting input from companies supporting the bill in order for the bill to be further deliberated this year. Specifically, the California Taxpayers Association recommends that letters to the appropriate lawmakers include how the legislation would help a company create jobs and increase investment in the state.

The next hurdle for the bill will be the hearing in the Assembly Appropriations Committee, which has not yet been set. It is possible that the provisions of this bill would be included in a budget bill.

We will keep you updated as this bill progresses.


Mark L. Nachbar

Mary Bernard

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