Earlier this week, Governor Gavin Newsom released his budget for 2022–2023. Several elements of the budget will impact state taxes. The proposals in the budget include an early end to the suspension of net operating loss deductions and the cap on the use of business tax credits. The governor also proposes a new credit “to encourage climate innovation.” The new credit would be for “companies that mitigate climate change and are headquartered in California.” The credit would be available for years 2022 to 2024. Another tax credit would be available to companies “that opt in to develop a green energy technology.” The credit will be for funding of “pre-development costs for new technologies…to reduce the use of natural gas.”
In addition, as the Legislature begins its final session, Assembly Constitutional Amendment No. 11 has been introduced to fund single-payer healthcare in California (AB 1400). The new taxes would include:
- A new gross receipts tax on businesses that have revenues in excess of $2 million at a rate of 2.3 percent,
- A new payroll tax on employers with more than 50 employees at a rate of 1.25% on wages and other compensation,
- An additional income tax on residents at a rate of 1% on wages exceeding $49,900, and
- An additional income tax on incomes higher than $149,509 with a top rate of 2.5%.
This measure would need to pass the Legislature by a two-thirds majority vote and then be ratified by taxpayers as a constitutional amendment. Business groups are already forming coalitions to oppose this measure, saying it will drive both business and individuals to leave the state.
TECHNICAL INFORMATION CONTACTS:
Mark L. Nachbar
Principal
Ryan
630.515.0477
mark.nachbar@ryan.com
Mary Bernard
Manager
Ryan
401.272.3363
mary.bernard@ryan.com
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