California Governor Gavin Newsom signed the state’s 2026–27 budget package, which includes S.B. 122, Chapter 23, a revenue trailer bill that, among other things, extends the existing temporary $5 million annual business tax credit limitation through taxable years beginning before January 1, 2030, together with additional exceptions for certain refundable credits or refundable amounts. The existing cap originally applied for the 2024, 2025, and 2026 taxable years. The new law extends it for three additional years, through taxable year 2029, and applies to business tax credits under both the Personal Income Tax Law and the Corporation Tax Law. An additional limit applies to credits beginning with the 2030 tax year and thereafter.

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