The California Legislature may vote today on the Governor’s tax provisions, including sales tax on software. For additional background, see materials from our recent webinar on the proposal. The state Constitution requires the Legislature to pass a budget bill by June 15 at midnight. The Constitution also requires that a bill be in print for 72 hours prior to passage by the Legislature. On Friday, two budget trailer bills were introduced that incorporate the language of the Governor’s sales tax proposal and a credit limitation modification.
- Impose sales tax on electronically delivered or remotely accessed software beginning in 2027;
- Extend the current business credit limitation and related refund provisions, which are currently set to expire after 2026, through 2029; and
- Impose a credit cap of the greater of 70% of tax or $5 million beginning in 2030.
- Impose sales tax on electronically delivered or remotely accessed software beginning in 2027 (the same sales tax provisions as SB 122);
- Adopt the Governor’s proposal to limit business tax credits to the greater of 50% of tax or $5 million in perpetuity beginning in 2027.
While budget trailer bills are not subject to the June 15 budget deadline, each bill will have been in print long enough for the Legislature to vote on them today if it chooses to do so. Stay tuned.