California Tax Proposals

Surprisingly, the revised California budget has a proposal to conform with Trump accounts.  

The California Governor has updated his 2026-2027 budget proposal.

 Tax related changes include:

·        Effective beginning in tax year 2027, Permanently Limit Business Credit Use to $5 million or 50% of Tax Liability, Whichever is Greater

·        Effective January 1, 2027, Sales Taxation of Digital Prewritten Software and Software as a Service (SAAS). The proposal will apply the sales tax to sales of digital prewritten software, regardless of how the product is delivered to the purchaser, whether on a disc or physical medium, electronic transmission and local hosting (download), or remote access through the internet, including Software-as-a-Service (SaaS), where the customer accesses the software hosted by the vendor but never takes possession of it.

·        Reduce the $800 Annual Tax for New Businesses by Half. The budget revision proposes to reduce the $800 annual tax paid by limited liability companies, limited partnerships, and limited liability partnerships in their first year to $400 during the 2027, 2028, and 2029 tax years.

·        Conform to Federal Tax Treatment of Trump Accounts retroactive to 2026.