Recently enacted California legislation (S.B. 122, Chapter 23) extends the $5 million annual credit limitation, and the related refundable credit election, through taxable years beginning before January 1, 2030. Beginning in 2030, a modified limitation is scheduled to apply. As a result, taxpayers with large California credit balances, particularly California research and development (R&D) credits, should evaluate whether they are likely to use those credits in the ordinary course or whether a refundable credit election may be beneficial.

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