Summary of Federal Income Tax Changes

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Public Law Law Title Section Section Title IRC Section CA Conforms? CA RTC Sections Fed. Effective Date Fed. Operative Date Background Summary / Analysis
116-127 Families First Coronavirus Response Act 7001 Payroll Credit for Required Paid Sick Leave Uncodified, affecting IRC Chapter 1 (commencing with section 1) and sections 3111 and 3221 No N/A 3/18/2020 Applies to qualified sick leave wages paid during the period beginning 4/1/2020 and on or before 12/31/2020 (IRS Notice 20-21) JCT Report, JCX-10-20, p. 8 Analysis of 116-127 §7001
116-127 Families First Coronavirus Response Act 7002 Credit for Sick Leave for Certain Self-Employed Individuals Uncodified, affecting IRC Subtitle A (commencing with section 1) and section 1401 No N/A 3/18/2020 Days occurring during the period beginning on 4/1/2020 through 12/31/2020 can be included in determining the qualified sick leave equivalent amount (IRS Notice 20-21) JCT Report, JCX-10-20, p. 12-14 Analysis of 116-127 §7002
116-127 Families First Coronavirus Response Act 7003 Payroll Credit for Required Paid Family Leave Uncodified, affecting IRC Chapter 1 (commencing with section 1) and sections 3111 and 3221 No N/A 3/18/2020 Applies to qualified family leave wages paid during the period beginning 4/1/2020 through 12/31/2020 (IRS Notice 20-21) JCT Report, JCX-10-20, p. 15-18 Analysis of 116-127 §7003
116-127 Families First Coronavirus Response Act 7004 Credit for Family Leave for Certain Self-Employed Individuals Uncodified, affecting IRC Subtitle A (commencing with section 1) No N/A 3/18/2020 Days occurring during the period beginning on 4/1/2020 through 12/31/2020 can be included in determining the qualified family leave equivalent amount (IRS Notice 20-21) JCT Report, JCX-10-20, dated 3/17/2020, p. 19 Analysis of 116-127 §7004
116-127 Families First Coronavirus Response Act 7005 Special Rule Related to Tax on Employers Uncodified, affecting IRC Chapter 1 (commencing with section 1) and sections 3111 and 3221 No N/A 3/18/2020 3/18/2020 JCT Report, JCX-10-20, p. 22 Analysis of 116-127 §7005
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 1106 Loan Forgiveness Uncodified, affecting IRC sections 61 and 265 The California Legislature has passed a law that provides an exclusion from gross income for amounts of covered loans that are forgiven under section 1106, like the exclusion in section 1106(i). 17071, 17131.8, 24271, 24308.6 3/27/2020. 3/27/2020 JCT Report, JCX-12R-20, p.104 Analysis of 116-136 §1106
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2201 2020 Recovery Rebates for Individuals 6211, 6213, 6428 No N/A 3/27/2020 3/27/2020 JCT Report, JCX-12R-20, pp. 3-12 Analysis of 116-136 §2201
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2202 Special Rules for Use of Retirement Funds 72 Yes  17071, 17081, 17085, 17085.7, 17501, 24271, 24601 3/27/2020 Operative for coronavirus-related distributions, as defined, made on or after 1/1/ 2020, and before 12/31/ 2020 JCT Report, JCX-12R-20, pp. 12-16 Analysis of 116-136 §2202
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2203 Temporary Waiver of Required Minimum Distribution Rules for Certain Retirement Plans and Accounts 401, 402 Yes  17501, 24601 3/27/2020 These provisions apply for calendar years after 12/31/2019, and applies to amendments to any plan or annuity contract made pursuant to the amendments that are made by this section and made on or before the last day of the first plan year beginning on or after 1/1/ 2022 JCT Report, JCX-12R-20, pp. 16-20 Analysis of 116-136 §2203
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2204 Allowance of Partial  Above the Line Deduction for Charitable Contributions 62 No 17024.5, 17072 3/27/2020 The amendments made by this section apply to taxable years beginning after 12/31/ 2019  JCT Report, JCX-12R-20, pp. 20-23 Analysis of 116-136 §2204
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2205 Modification of Limitations on Charitable Contributions During 2020 170 No 17201, 17275.2, 17275.3, 17275.5, 24357 – 24359.1 3/27/2020 The provision applies to taxable years ending after 12/31/2019 JCT Report, JCX-12R-20, pp. 23-26 Analysis of 116-136 §2205
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2206 Exclusion for Certain Employer Payments of Student Loans 127, 221 No 17131, 17151 3/27/2020 Operative for payments made after 3/27/2020 and before 1/1/2021 JCT Report, JCX-12R-20, pp. 26- 29 Analysis of 116-136 §2206
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2301 Employee Retention Credit for Employers Subject to Closure Due to COVID-19 Uncodified provision impacting IRC sections 3111 and 3221 N/A N/A 3/27/2020 Operative for wages paid after 3/ 12/2020, and before1/1/2021 JCT Report, JCX-12R-20, pp. 30-43 Analysis of 116-136 §2301
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2302 Delay of Payment of Employer Payroll Taxes Uncodified provisions affecting IRC sections 1401, 3111, 3211, 3221, 6654 N/A N/A 3/27/2020 Operative for payments deferred beginning on 3/27/2020 and before 1/1/2021. JCT Report, JCX-12R-20, pp. 43-50 Analysis of 116-136 §2302
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2303 Modifications for Net Operating Losses 172 and 860E No 17201, 17276-17276.22, 24416-24416.22 3/27/2020 The provision suspending application of the 80% taxable income limitation applies to taxable years beginning after 12/31/2017, and to taxable years beginning on or before 12/31/2017, to which NOL arising in taxable years beginning after 12/31/2017, are carried.

The provision modifying the rules relating to carrybacks applies to NOLs arising in taxable years beginning after 12/31/2017, and taxable years beginning before, on, or after such date to which such NOLs are carried.

The technical amendments made by the provision are effective as if included in section 13302 of PL 115-97.

JCT Report, JCX-12R-20, pp. 50-55 Analysis of 116-136 §2303
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2304 Modification of Limitation on Losses for Taxpayers Other than Corporations 461 No 17551, 17560.5, 24681 3/27/2020 The provision suspending the disallowance of excess business loss is operative for taxable years beginning after 12/31/2017.  The technical amendments to IRC section 461(l) made by the provision are operative as if included in section 11012 of PL 115-97 for taxable years beginning after 12/31/2017. JCT Report, JCX-12R-20, pp. 55-59 Analysis of 116-136 §2304
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2305 Modification of Credit for Prior Year Minimum Tax Liability of Corporations 53 No 17063, 23453 3/27/2020 This provision is operative for taxable years beginning after 12/ 31/ 2017 JCT Report, JCX-12R-20, pp. 59-60 Analysis of 116-136 §2305
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2306 Modification of Limitation on Business Interest 163 No 17024.5, 17201, 23051.5, 24344, 24344.7  3/27/2020 This section is operative for taxable years beginning after 12/31/ 2018. JCT Report, JCX-12R-20, pp. 61-67 Analysis of 116-136 §2306
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2307 Technical Amendments Regarding Qualified Improvement Property 168 No 17201, 17250, 24349 3/27/2020 This section is operative as if included in section 13204 of the Tax cuts and Jobs Act ( PL 115-97). JCT Report, JCX-12R-20, pp. 67-71 Analysis of 116-136 §2307
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2308 Temporary Exception from Excise Tax for Alcohol Used to Produce Hand Sanitizer 5214 No N/A 3/27/2020 Applies to distilled spirits removed after 12/31/2019, and before 1/1/2021. JCT Report, JCX-12R-20, pp. 71-72 Analysis of 116-136 §2308
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3516 Technical Amendments  6103 No 19542-19547, 19549, 19551-19555, 19559, 19561, 19562, 19565  3/27/2020 This section is operative as if included in the Fostering Undergraduate Talent by Unlocking Resources for Education Act or the “FUTURE Act” (P.L. 116–91) JCT Report, JCX-12R-20, pp. 73-76 Analysis of 116-136 §3516
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3606 Advanaced Refunding of Credits Uncodified, affecting IRC section 3111 and 3221 by amending sections 7001 and 7003 of the Families First Coronavirus Response Act, (Public Law 116-127). No N/A 3/27/2020 Applies to qualified family leave wages paid during the period beginning 4/1/2020 and on or before 12/31/2020 (IRS Notice 20-21) JCT Report, JCX-12R-20, pp. 77-81 Analysis of 116-136 §3606
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3607 Expansion of DOL Authority to Postpone Certain Deadlines N/A N/A N/A 3/27/2020 3/27/2020 JCT Report, JCX-12R-20, pp. 81-82 Analysis of 116-136 §3607
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3608 Single-Employer Plan Funding Rules Uncodified provisions, affecting IRC sections 430 and 436 Partially 17501, 24601 3/27/2020 3/27/2020 JCT Report, JCX-12R-20, pp. 83-90 Analysis of 116-136 §3608
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3609 Application of Cooperative and Small Employer Charity Pension Plan Rules to Certain Charitable Employers Whose Primary Exempt Purpose is Providing Services with Respect to Mothers and Children.   414 Yes  17501, 24601 3/27/2020 The provision is applicable to plan years beginning after December 31, 2018  JCT Report, JCX-12R-20, pp. 90-95 Analysis of 116-136 §3609
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3701 Exemption for Telehealth Services 223 No 17215.4 3/27/2020 This provision is operative for plan years beginning on or before December 31, 2021  JCT Report, JCX-12R-20, pp. 96-97 Analysis of 116-136 §3701
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 3702 Inclusion of Certain Over-The-Counter Medical Products as Qualified Medical Expenses 105, 106, 220, and 223 No 17024.5, 17131, 17131.4, 17201, 17215, 17215.1, and 17215.4 3/27/2020 The provision applies to distributions from HSAs and MSAs for amounts paid after December 31, 2019.
The provision applies to reimbursements from health FSAs and HRAs for expenses incurred after December 31, 2019.
JCT Report, JCX-12R-20, pp. 98-100 Analysis of 116-136 §3702
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 4003 Emergency Relief and Taxpayer Protections Uncodified, affecting IRC section 382 No 17024.5, 17321, 17323, 23051.5, 24451, 24458, 24459, and 24472 3/27/2020 3/27/2020 JCT Report, JCX-12R-20, p.105 Analysis of 116-136 §4003
116-136 Coronavirus Aid, Relief, and Economic Security (CARES) Act 4007 Suspension of Certain Aviation Excise Taxes Uncodified, affecting IRC sections 4041, 4081, 4083, 4261, 4271, and 6427 No N/A 3/27/2020 The suspension of these excise taxes applies from March 28, 2020 through December 31, 2020.   JCT Report, JCX-12R-20, pp. 101-103 Analysis of 116-136 §4007
116-139 Paycheck Protection Program and Health Care Enhancement Act 101 Amendments to the Paycheck Protection Program, Economic Injury Disaster Loans, and Emergency Grants Uncodified, amends Division A of the CARES Act (PL 116-136) No 17071, 17131.8, 24271, 24308.6 4/24/2020 4/24/2020 JCT Report, JCX-12R-20, p. 104 Analysis of 116-139 §101
116-142 Paycheck Protection Program Flexibility Act of 2020 3 Amendments to Paycheck Protection Program Loan Forgiveness Uncodified, affecting IRC sections 61 and 265 No 17071, 17131.8, 24271, 24308.6 3/27/2020 Applies to loans made pursuant to SBA Section 7(a)(36) or CARES Act Section 1109 JCT Report, JCX-12R-20, p. 104 Analysis of 116-142 §3
116-142 Paycheck Protection Program Flexibility Act of 2020 4 Delay of Payment of Employer Payroll Taxes Uncodified, affecting IRC section 3111 N/A N/A N/A N/A JCT Report, JCX-12R-20, p. 43 Analysis of 116-142 §4
116-260 Consolidated Appropriations Act, 2021 272 Additional 2020 Recovery Rebates for Individuals 6428A No N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 784 Analysis of 116-260 §272
116-260 Consolidated Appropriations Act, 2021 273 Amendments to Recovery Rebates under the CARES Act Uncodified, affecting the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), and IRC Subtitle A (commencing with section 1) and section 6428 No N/A 03/27/2020 03/27/2020 Consolidated Appropriations Act, 2021, page 795 Analysis of 116-260 §273
116-260 Consolidated Appropriations Act, 2021 274 Extension of Certain Deferred Payroll Taxes Uncodified, affecting Internal Revenue Service Notice 2020-65 N/A N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 797 Analysis of 116-260 §274
116-260 Consolidated Appropriations Act, 2021 275 Regulations or Guidance Clarifying Application of Educator Expense Tax Deduction Uncodified, affecting IRC section 62 No 17072 12/27/2020 Expenses paid or incurred after 3/12/2020 Consolidated Appropriations Act, 2021, page 797 Analysis of 116-260 §275
116-260 Consolidated Appropriations Act, 2021 276 Clarification of Tax Treatment of Forgiveness of Covered Loans Uncodified, affecting the Small Business Act, section 7A, and IRC sections 61, 265, 705, 1017, and 1366 No 17071, 17131.8, 17280, 24271, 24308.6, 24425 12/27/2020 The original Payroll Protection Program (PPP) loan provision is effective for taxable years beginning after 3/27/2020

The subsequent PPP loans provision is effective for taxable years ending after 12/27/2020

Consolidated Appropriations Act, 2021, page 798 Analysis of 116-260 §276
116-260 Consolidated Appropriations Act, 2021 277 Emergency Financial Aid Grants Uncodified, affecting the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) section 3504, and IRC Subtitle A (commencing with section 1) and sections 25A, 61 No 17071, 17131.8, 24271, 24308.6 03/27/2020 Emergency financial aid grants made on or after 3/27/2020 Consolidated Appropriations Act, 2021, page 799 Analysis of 116-260 §277
116-260 Consolidated Appropriations Act, 2021 278 Clarification of Tax Treatment of Certain Loan Forgiveness and other Business Financial Assistance Uncodified, affecting CARES Act, sections 1109, 1110, and 1112, and IRC sections 61, 265, 705, 1017, and 1366. No 17071, 17131.8, 17280, 24271, 24308.6, 24425 12/27/2020 The provisions related to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, including PPP-related provisions, Economic Injury Disaster Loan (EIDL) advances, and subsidies for certain loan payments under the CARES Act are effective for taxable years ending after 3/27/2020.

The provision relating to grants for shuttered venue operators is effective for taxable years ending after 12/27/2020.

The provision relating to EIDL advances under Division N, Title III, section 331 (Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act) is effective for taxable years beginning after 12/27/2020.

Consolidated Appropriations Act, 2021, page 799 Analysis of 116-260 §278
116-260 Consolidated Appropriations Act, 2021 279 Authority to Waive Certain Information Reporting Requirements Uncodified, affecting various sections of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), sections 276(b), 277, and 278 of the Act, and IRC Subtitle F, Chapter 61 (commencing with section 6012) Partially 18631 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 801 Analysis of 116-260 §279
116-260 Consolidated Appropriations Act, 2021 280 Application of Special Rules to Money Purchase Pension Plans Uncodified, affecting the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2202, and IRC section 72 Yes 17071, 17081, 17085, 17085.7, 17501, 24271, 24601 03/27/2020 Operative for coronavirus-related distributions, as defined, made on or after 1/1/2020, and before 12/31/2020. Consolidated Appropriations Act, 2021, page 801 Analysis of 116-260 §280
116-260 Consolidated Appropriations Act, 2021 281 Election to Waive Application of Certain Modifications to Farming Losses Uncodified, affecting the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2303, and IRC sections 172 and 860E No 17201, 17276-17276.22, 24416-24416.22 03/27/2020 The provision modifying the rules relating to carrybacks applies to a net operating loss (NOL) arising in taxable years beginning after 12/31/2017. The provision modifying the rules relating to NOL limitations applies to taxable years beginning after 12/31/2017, and taxable years beginning on or before such date to which NOLs arising in taxable years beginning after such date are carried. Consolidated Appropriations Act, 2021, page 802 Analysis of 116-260 §281
116-260 Consolidated Appropriations Act, 2021 283 Disclosures to Identify Tax Receivables Not Eligible for Collection Pursuant to Qualified Tax Collection Contracts 6103, 7213 No 19542 - 19572 12/27/2020 Disclosures made on or after 12/27/2020 Consolidated Appropriations Act, 2021, page 803 Analysis of 116-260 §283
116-260 Consolidated Appropriations Act, 2021 284 Modification of Certain Protections for Taxpayer Return Information 6103 No 19542 - 19572 Disclosures made after 12/19/2019 Disclosures made after 12/19/2019 Consolidated Appropriations Act, 2021, page 804 Analysis of 116-260 §284
116-260 Consolidated Appropriations Act, 2021 285 2020 Election to Terminate Transfer Period for Qualified Transfers from Pension Plan for Covering Future Retiree Costs 420 Yes 17501, 24601 12/27/2020 For taxable years beginning after the date of a one-time election to terminate the transfer period for pension plans to cover future retiree costs, that is made during taxable years beginning after 12/31/2019 and before 12/31/2021 Consolidated Appropriations Act, 2021, page 807 Analysis of 116-260 §285
116-260 Consolidated Appropriations Act, 2021 286 Extension of Credits for Paid Sick and Family Leave Uncodified, affecting Families First Coronavirus Response Act (FFCRA), sections 7001-7004, and IRC sections 1401, 3111, and 3221 No N/A 03/18/2020 Various, see Summary of Federal Change Consolidated Appropriations Act, 2021, page 808 Analysis of 116-260 §286
116-260 Consolidated Appropriations Act, 2021 288 Certain Technical Improvements to Credits for Paid Sick and Family Leave Uncodified, affecting Families First Coronavirus Response Act (FFCRA), sections 7001 and 7003, and IRC sections 3111 and 3221 N/A N/A 03/18/2020 Applies to qualified family leave wages paid during the period beginning 4/1/2020 through 3/31/2021. Consolidated Appropriations Act, 2021, page 811 Analysis of 116-260 §288
116-260 Consolidated Appropriations Act, 2021 304 Additional Eligible Expenses Uncodified, affecting the Small Business Act, sections 7 and 7A, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, sections 1106 and 1109, and IRC sections 61 and 265 No 17071, 17131.8, 24271, 24308.6 12/27/2020 Allows loans made under Payroll Protection Program (PPP) before, on, or after 12/27/2020, to utilize funds for additional forgivable expenses, except for borrowers who have already had their loans forgiven. Consolidated Appropriations Act, 2021, page 812 Analysis of 116-260 §304
116-260 Consolidated Appropriations Act, 2021 421 Assistance for Providers of Transportation Services Affected by COVID-19 Uncodified, affecting IRC section 3111 N/A N/A 12/27/2020 Certain transportation services beginning 12/27/2020, and ending the later of 3/31/2021 or the date in which all authorized funds are expended, but not later than 12/27/2023. Consolidated Appropriations Act, 2021, page 880 Analysis of 116-260 §421
116-260 Consolidated Appropriations Act, 2021 501 Emergency Rental Assistance Uncodified, affecting IRC section 61 No 17071, 24271 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 888 Analysis of 116-260 §501
116-260 Consolidated Appropriations Act, 2021 512 Great Lakes St. Lawrence Seaway Development Corporation 9505 N/A N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 1575 Analysis of 116-260 §512
116-260 Consolidated Appropriations Act, 2021 102 Health Insurance Requirements Regarding Surprise Medical Billing 9815, 9816, 9817, 9822, 223 No 17201, 17215.4 12/27/2020 Plan years beginning on or after 1/1/2022 Consolidated Appropriations Act, 2021, page 1577 Analysis of 116-260 §102
116-260 Consolidated Appropriations Act, 2021 103 Determination of Out-Of-Network Rates to be Paid by Health Plans; Independent Dispute Resolution Process 9816 No N/A 12/27/2020 Various Consolidated Appropriations Act, 2021, page 1616 Analysis of 116-260 §103
116-260 Consolidated Appropriations Act, 2021 105 Ending Surprise Air Ambulance Bills 9817 No N/A 12/27/2020 Operative with respect to plan years beginning on or after 1/1/2022 Consolidated Appropriations Act, 2021, page 1650 Analysis of 116-260 §105
116-260 Consolidated Appropriations Act, 2021 106 Reporting Requirements Regarding Air Ambulance Services 9823 No N/A 12/27/2020 Operative with respect to plan years beginning on or after 1/1/2022 Consolidated Appropriations Act, 2021, page 1670 Analysis of 116-260 §106
116-260 Consolidated Appropriations Act, 2021 107 Transparency Regarding In-Network and Out-Of-Network Deductibles and Out-Of-Pocket Limitations 9816 9816 N/A 12/27/2020 Operative with respect to plan years beginning on or after 1/1/2022. Consolidated Appropriations Act, 2021, page 1677 Analysis of 116-260 §107
116-260 Consolidated Appropriations Act, 2021 111 Consumer Protections through Health Plan Requirement for Fair and Honest Advance Cost Estimate 9816 No N/A 12/27/2020 Operative with respect to plan years beginning on or after 1/1/2022. Consolidated Appropriations Act, 2021, page 1680 Analysis of 116-260 §111
116-260 Consolidated Appropriations Act, 2021 113 Ensuring Continuity of Care 9818 No N/A 12/27/2020 Operative with respect to plan years beginning on or after 1/1/2022. Consolidated Appropriations Act, 2021, page 1687 Analysis of 116-260 §113
116-260 Consolidated Appropriations Act, 2021 114 Maintenance of Price Comparison Tool 9819 No N/A 12/27/2020 Operative with respect to plan years beginning on or after 1/1/2022 Consolidated Appropriations Act, 2021, page 1693 Analysis of 116-260 §114
116-260 Consolidated Appropriations Act, 2021 116 Protecting Patients and Improving the Accuracy of Provider Directory Information 9820 No N/A 12/27/2020 Plan years beginning on or after 1/1/2022 Consolidated Appropriations Act, 2021, page 1697 Analysis of 116-260 §116
116-260 Consolidated Appropriations Act, 2021 201 Increasing Transparency by Removing Gag Clauses on Price and Quality Information 9824 No N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 1709 Analysis of 116-260 §201
116-260 Consolidated Appropriations Act, 2021 203 Strengthening Parity in Mental Health and Substance Use Disorder Benefits 9812 No N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 1719 Analysis of 116-260 §203
116-260 Consolidated Appropriations Act, 2021 204 Reporting on Pharmacy Benefits and Drug Costs 9825 No N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 1737 Analysis of 116-260 §204
116-260 Consolidated Appropriations Act, 2021 101 Reduction in Medical Expense Deduction Floor 213 No 17201 and 17241 12/27/2020 Taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1858 Analysis of 116-260 §101
116-260 Consolidated Appropriations Act, 2021 102 Energy Efficient Commercial Buildings Deduction 179D No 17257.2 Property placed in service after 12/31/2020 Property placed in service after 12/31/2020 Consolidated Appropriations Act, 2021, page 1858 Analysis of 116-260 §102
116-260 Consolidated Appropriations Act, 2021 103 Benefits Provided to Volunteer Firefighters and Emergency Medical Responders 139B No 17131 Taxable years beginning after 12/31/2020 Taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1859 Analysis of 116-260 §103
116-260 Consolidated Appropriations Act, 2021 104 Transition from Deduction for Qualified Tuition and Related Expenses to Increased Income Limitation on Lifetime Learning Credit 25A, 222 No 17204.7 Taxable years beginning after 12/31/2020 Taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1859 Analysis of 116-260 §104
116-260 Consolidated Appropriations Act, 2021 105 Railroad Track Maintenance Credit 45G No N/A 12/27/2020 For taxable years ending after 12/27/2020 Consolidated Appropriations Act, 2021, page 1860 Analysis of 116-260 §105
116-260 Consolidated Appropriations Act, 2021 106 Certain Provisions Related to Beer, Wine, and Distilled Spirits 263A, 5001, 5041, 5051, 5212, 5414, 5555 No 17201, 24422.3 12/27/2020 Interest costs paid or accrued after 12/31/2020 Consolidated Appropriations Act, 2021, page 1860 Analysis of 116-260 §106
116-260 Consolidated Appropriations Act, 2021 107 Refunds in Lieu of Reduced Rates for Certain Craft Beverages Produced Outside the United States 5001, 5041, 5051, 6038E, 7652 N/A N/A 12/27/2020 Generally, for distilled spirits, beer, and wine brought into the US and removed after 12/31/2022, with various other operative dates Consolidated Appropriations Act, 2021, page 1864 Analysis of 116-260 §107
116-260 Consolidated Appropriations Act, 2021 108 Reduced Rates Not Allowed for Smuggled or Illegally Produced Beer, Wine, and Spirits 5067, 5068 N/A N/A 12/27/2020 For distilled spirits, beer, and wine produced after 12/27/2020 Consolidated Appropriations Act, 2021, page 1868 Analysis of 116-260 §108
116-260 Consolidated Appropriations Act, 2021 109 Minimum Processing Requirements for Reduced Distilled Spirits Rates 5001, 5002 N/A N/A 12/27/2020 For distilled spirits removed after 12/31/2021 Consolidated Appropriations Act, 2021, page 1868 Analysis of 116-260 §109
116-260 Consolidated Appropriations Act, 2021 110 Modification of Single Taxpayer Rules 5001, 5041, 5051 N/A N/A 12/27/2020 For beer, wine, and distilled spirits removed after 12/31/2020 Consolidated Appropriations Act, 2021, page 1868 Analysis of 116-260 §110
116-260 Consolidated Appropriations Act, 2021 111 Look-Thru Rule for Related Controlled Foreign Corporations 954 No 25110 12/27/2020 Taxable years beginning after 12/31/2020 and before 1/1/2026, and to taxable years of US shareholders with or within which such taxable years of foreign corporations end. Consolidated Appropriations Act, 2021, page 1869 Analysis of 116-260 §111
116-260 Consolidated Appropriations Act, 2021 112 New Markets Tax Credit 45D No N/A 12/27/2020 Calendar years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1869 Analysis of 116-260 §112
116-260 Consolidated Appropriations Act, 2021 113 Work Opportunity Credit 51 No 17053.6, 23624 12/27/2020 Applies to individuals who begin work for an employer after 12/31/2020 Consolidated Appropriations Act, 2021, page 1869 Analysis of 116-260 §113
116-260 Consolidated Appropriations Act, 2021 114 Exclusion from Gross Income of Discharge of Qualified Principal Residence Indebtedness 108 No 17071, 17131, and 17144.5 12/27/2020 Discharges of indebtedness after 12/31/2020 and before 1/1/2026 Consolidated Appropriations Act, 2021, page 1869 Analysis of 116-260 §114
116-260 Consolidated Appropriations Act, 2021 115 7-Year Recovery Period for Motorsports Entertainment Complexes 168 No 17201, 17250, and 24349-24355.4 12/27/2020 Property placed in service after 12/31/2020 and before 1/1/2026. Consolidated Appropriations Act, 2021, page 1869 Analysis of 116-260 §115
116-260 Consolidated Appropriations Act, 2021 116 Expensing Rules for Certain Productions 181 No 17201.5, 17250, 17250.5, 24349 12/27/2020 Productions that commence after 12/31/2020 and before 1/1/2026 Consolidated Appropriations Act, 2021, page 1870 Analysis of 116-260 §116
116-260 Consolidated Appropriations Act, 2021 117 Oil Spill Liability Trust Fund Rate 4611 N/A N/A 12/27/2020 On and after 1/1/2021 Consolidated Appropriations Act, 2021, page 1870 Analysis of 116-260 §117
116-260 Consolidated Appropriations Act, 2021 118 Empowerment Zone Tax Incentives 1391, 1397A, 1397B No 17053.73, 23626 12/27/2020 For taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1870 Analysis of 116-260 §118
116-260 Consolidated Appropriations Act, 2021 119 Employer Credit for Paid Family and Medical Leave 45S No N/A 12/27/2020 Wages paid in taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1870 Analysis of 116-260 §119
116-260 Consolidated Appropriations Act, 2021 120 Exclusion for Certain Employer Payments of Student Loans 127 No 17151 12/27/2020 Payments made after 12/31/2020 and before 1/1/2026 Consolidated Appropriations Act, 2021, page 1870 Analysis of 116-260 §120
116-260 Consolidated Appropriations Act, 2021 121 Extension of Carbon Oxide Sequestration Credit 45Q No N/A 12/27/2020 12/27/2020 Consolidated Appropriations Act, 2021, page 1870 Analysis of 116-260 §121
116-260 Consolidated Appropriations Act, 2021 131 Credit for Electricity Produced from Certain Renewable Resources 45, 48 No N/A 01/01/2021 01/01/2021 Consolidated Appropriations Act, 2021, page 1871 Analysis of 116-260 §131
116-260 Consolidated Appropriations Act, 2021 132 Extension and Phaseout of Energy Credit 48 No N/A 01/01/2020 01/01/2020 Consolidated Appropriations Act, 2021, page 1871 Analysis of 116-260 §132
116-260 Consolidated Appropriations Act, 2021 133 Treatment of Mortgage Insurance Premiums as Qualified Residence Interest 163 No 17225 12/27/2020 For amounts paid or accrued after 12/31/2020. Consolidated Appropriations Act, 2021, page 1872 Analysis of 116-260 §133
116-260 Consolidated Appropriations Act, 2021 134 Credit for Health Insurance Costs of Eligible Individuals 35 No N/A 12/27/2020 Months beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1872 Analysis of 116-260 §134
116-260 Consolidated Appropriations Act, 2021 135 Indian Employment Credit 45A No N/A 12/27/2020 Taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1872 Analysis of 116-260 §135
116-260 Consolidated Appropriations Act, 2021 136 Mine Rescue Team Training Credit 45N No N/A 12/27/2020 Applies to taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1872 Analysis of 116-260 §136
116-260 Consolidated Appropriations Act, 2021 137 Classification of Certain Race Horses as 3-Year Property 168 No 17201, 17250, 24349 12/27/2020 Property placed in service after 12/31/2020 and before 1/1/2022 Consolidated Appropriations Act, 2021, page 1872 Analysis of 116-260 §137
116-260 Consolidated Appropriations Act, 2021 138 Accelerated Depreciation for Business Property on Indian Reservations 168 No 17201, 17250, 24349-24355.4 12/27/2020 Property placed in service after 12/31/2020 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §138
116-260 Consolidated Appropriations Act, 2021 139 American Samoa Economic Development Credit Uncodified, amends Section 119 of Division A of the Tax Relief and Health Care Act of 2006 (PL 109-432) No N/A 12/27/2020 Taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §139
116-260 Consolidated Appropriations Act, 2021 140 Second Generation Biofuel Producer Credit 40 No N/A 12/27/2020 For qualified second generation biofuel production after 12/31/2020 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §140
116-260 Consolidated Appropriations Act, 2021 141 Nonbusiness Energy Property 25C No N/A 12/27/2020 Property placed in service after 12/31/2020 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §141
116-260 Consolidated Appropriations Act, 2021 142 Qualified Fuel Cell Motor Vehicles 30B No N/A 12/27/2020 Property purchased after 12/31/2020 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §142
116-260 Consolidated Appropriations Act, 2021 143 Alternative Fuel Refueling Property Credit 30C No N/A 12/27/2020 Property placed in service after 12/31/2020, and on or before 12/31/2021 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §143
116-260 Consolidated Appropriations Act, 2021 144 2-Wheeled Plug-In Electric Vehicle Credit 30D No N/A 12/27/2020 Vehicles acquired after 12/31/2020, and before 1/1/2022 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §144
116-260 Consolidated Appropriations Act, 2021 145 Production Credit for Indian Coal Facilities 45 No N/A 12/27/2020 Coal produced after 12/31/2020, and on or before 12/31/2021 Consolidated Appropriations Act, 2021, page 1873 Analysis of 116-260 §145
116-260 Consolidated Appropriations Act, 2021 146 Energy Efficient Homes Credit 45L No N/A 12/27/2020 Homes acquired after 12/31/2020 Consolidated Appropriations Act, 2021, page 1874 Analysis of 116-260 §146
116-260 Consolidated Appropriations Act, 2021 147 Extension of Excise Tax Credits Relating to Alternative Fuels 6426, 6427 N/A N/A 12/27/2020 Applies to fuel sold or used after 12/31/2020 Consolidated Appropriations Act, 2021, page 1874 Analysis of 116-260 §147
116-260 Consolidated Appropriations Act, 2021 148 Extension of Residential Energy-Efficient Property Credit and Inclusion of Biomass Fuel Property Expenditures 25C and 25D No N/A 12/27/2020 Property placed in service after 12/31/2020, or for qualified biomass fuel property, expenditures paid or incurred in taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1874 Analysis of 116-260 §148
116-260 Consolidated Appropriations Act, 2021 149 Black Lung Disability Trust Fund Excise Tax 4121 N/A N/A 12/27/2020 Applies to sales after 12/31/2020 Consolidated Appropriations Act, 2021, page 1875 Analysis of 116-260 §149
116-260 Consolidated Appropriations Act, 2021 201 Minimum Low-Income Housing Tax Credit Rate 42 No 17057.5, 17058, 23610.4, 23610.5 12/27/2020 Allocations of housing credit dollar amounts and financed obligations issued after 12/31/2020 Consolidated Appropriations Act, 2021, page 1875 Analysis of 116-260 §201
116-260 Consolidated Appropriations Act, 2021 202 Depreciation of Certain Residential Rental Property over 30-Year Period Uncodified, affecting the Tax Cuts and Jobs Act, PL 115-97, section 13204 and IRC section 168. No 17201 and 24349 12/27/2020 Taxable years beginning after 12/31/2017 Consolidated Appropriations Act, 2021, page 1875 Analysis of 116-260 §202
116-260 Consolidated Appropriations Act, 2021 203 Waste Energy Recovery Property Eligible for Energy Credit 48 No N/A 12/27/2020 Periods after December 31, 2020, under rules similar to the rules of IRC section 48(m) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990 (PL 101-508) Consolidated Appropriations Act, 2021, page 1876 Analysis of 116-260 §203
116-260 Consolidated Appropriations Act, 2021 204 Extension of Energy Credit for Offshore Wind Facilities 48 No N/A 12/27/2020 Periods after 12/31/2016, under rules similar to the rules of IRC section 48(m) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990 (PL 101-508). Consolidated Appropriations Act, 2021, page 1876 Analysis of 116-260 §204
116-260 Consolidated Appropriations Act, 2021 205 Minimum Rate of Interest for Certain Determinations Related to Life Insurance Contracts 7702 No 17020.6, 23045 12/27/2020 Contracts issued after 12/31/2020 Consolidated Appropriations Act, 2021, page 1877 Analysis of 116-260 §205
116-260 Consolidated Appropriations Act, 2021 206 Clarifications and Technical Improvements to CARES Act Employee Retention Credit Uncodified, amends Section 2301 of the CARES Act and Section 7A of the Small Business Act No N/A 03/27/2020 Wages paid after 3/12/2020

In addition, certain amounts from earlier quarters may be claimed in the fourth quarter of 2020. This will apply only for employers that did not apply the law consistently with the retroactive changes.

Consolidated Appropriations Act, 2021, page 1878 Analysis of 116-260 §206
116-260 Consolidated Appropriations Act, 2021 207 Extension and Modification of Employee Retention and Rehiring Tax Credit Uncodified, affecting the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), section 2301, and IRC Subtitle A (commencing with section 1) and sections 3111 and 3221 N/A N/A 12/27/2020 Calendar year quarters beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1880 Analysis of 116-260 §207
116-260 Consolidated Appropriations Act, 2021 208 Minimum Age for Distributions during Working Retirement 401 Yes 17501, 24601 12/27/2020 Distributions made before, on, or after 12/27/2020 Consolidated Appropriations Act, 2021, page 1884 Analysis of 116-260 §208
116-260 Consolidated Appropriations Act, 2021 209 Temporary Rule Preventing Partial Plan Termination Uncodified, affecting IRC sections 401, 411 Yes 17501, 24601 12/27/2020 For plan years that include the period beginning 3/13/2020 and ending 3/31/2021, if the number of active participants covered by the plan on 3/31/2021 is at least 80 percent of the number of active participants covered by the plan on 3/13/2020. Consolidated Appropriations Act, 2021, page 1885 Analysis of 116-260 §209
116-260 Consolidated Appropriations Act, 2021 210 Temporary Allowance of Full Deduction for Business Meals 274 No 17201, 24443 12/27/2020 Amounts paid or incurred after 12/31/2020 and before 1/1/2023 Consolidated Appropriations Act, 2021, page 1885 Analysis of 116-260 §210
116-260 Consolidated Appropriations Act, 2021 211 Temporary Special Rule for Determination of Earned Income Uncodified, affecting IRC sections 24, 32, 61, and 6213 No 17052 12/27/2020 First taxable year that begins in 2020 Consolidated Appropriations Act, 2021, page 1885 Analysis of 116-260 §211
116-260 Consolidated Appropriations Act, 2021 212 Certain Charitable Contributions Deductible by Non-Itemizers 62, 63, 170, 6662, 6751 No 17024.5, 17072, 17201 12/27/2020 Taxable years beginning after 12/31/2020 Consolidated Appropriations Act, 2021, page 1886 Analysis of 116-260 §212
116-260 Consolidated Appropriations Act, 2021 213 Modification of Limitations on Charitable Contributions Uncodified, affecting Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2205, and IRC section 170. No 17201, 17275.2, 17275.3, 17275.5, 24357 – 24359.1 12/27/2020 Contributions made after 12/31/2020 Consolidated Appropriations Act, 2021, page 1887 Analysis of 116-260 §213
116-260 Consolidated Appropriations Act, 2021 214 Temporary Special Rules for Health and Dependent Care Flexible Spending Arrangements Uncodified, affecting IRC sections 21, 106, 125, and 126 No 17131 12/27/2020 For Health flexible spending arrangement (FSA) and dependent care FSA plan years 2020 and 2021 Consolidated Appropriations Act, 2021, page 1887 Analysis of 116-260 §214
116-260 Consolidated Appropriations Act, 2021 302 Special Disaster-Related Rules for Use of Retirement Funds Uncodified, affecting IRC sections 72, 402, 403, 408, 414, 457, 3405 Partially 17071, 17081, 17085, 17085.7, 17501, 24271, 24601 12/27/2020 Various, see Summary of Federal Change Consolidated Appropriations Act, 2021, page 1889 Analysis of 116-260 §302
116-260 Consolidated Appropriations Act, 2021 303 Employee Retention Credit for Employers Affected by Qualified Disasters Uncodified, affecting IRC Subtitle A (commencing with section 1) and section 38 No N/A 12/27/2020 For qualified wages beginning on the date on which a trade or business first became inoperable as a result of the disaster at the employee’s principal place of employment immediately before the disaster, and ending on the earlier of the date on which the trade or business resumed significant operations at the employee’s principal place of employment, or 150 days after the last day of the disaster incident period. Consolidated Appropriations Act, 2021, page 1894 Analysis of 116-260 §303
116-260 Consolidated Appropriations Act, 2021 304 Other Disaster-Related Tax Relief Provisions Uncodified, affecting Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2205, and IRC sections 165 and 170. No 17201, 17204, 24357 – 24359.1 12/27/2020 Contributions paid beginning on 1/1/2020 and ending 60 days after 12/27/2020

Personal casualty losses arising in a qualified disaster area, on or after the first day of the incident period of a related qualified disaster

Consolidated Appropriations Act, 2021, page 1898 Analysis of 116-260 §304
116-260 Consolidated Appropriations Act, 2021 305 Low-Income Housing Tax Credit Uncodified, affecting IRC section 42 No 17057.5, 17058, 23610.4, 23610.5 12/27/2020 Calendar years 2021 and 2022, and qualified disaster areas beginning on 1/1/2020, and ending on the date which is 60 day after 12/27/2020 Consolidated Appropriations Act, 2021, page 1899 Analysis of 116-260 §305
116-260 Consolidated Appropriations Act, 2021 102 Disclosures to Identify Tax Receivables Not Eligible for Collection Pursuant to Qualified Tax Collection Contracts 6103, 7213 No 19542-19547, 19549, 19551-19555, 19559, 19561, 19562, 19565 12/27/2020 Disclosures made on or after 12/27/2020 Consolidated Appropriations Act, 2021, page 1902 Analysis of 116-260 §102
116-260 Consolidated Appropriations Act, 2021 103 Modification of Certain Protections for Taxpayer Return Information 6103 No 19542-19547, 19549, 19551-19555, 19559, 19561, 19562, 19565 12/27/2020 Disclosures made after 12/19/2019, the date of the enactment of the FUTURE Act (Public Law 116–91). Consolidated Appropriations Act, 2021, page 1903 Analysis of 116-260 §103
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Legend

IRC
Internal Revenue Code
RTC, CA RTC
California Revenue and Taxation Code
PITL
Personal Income Tax Law
CTL
Corporation Tax Law
Baseline
A baseline revenue impact is generally determined when California automatically conforms to the modified IRC section, since there will be no changes in tax law in future tax years.
N/A
Not applicable. When listed in the revenue table, revenue impact does not require a revenue estimate.

Details of Public Law 116-127, section 7001

Title
Families First Coronavirus Response Act, Payroll Credit for Required Paid Sick Leave
Federal Effective Date
3/18/2020
Federal Operative Date
Applies to qualified sick leave wages paid during the period beginning 4/1/2020 and on or before 12/31/2020 (IRS Notice 20-21)
Background
JCT Report, JCX-10-20, p. 8
IRC Section
Uncodified, affecting IRC Chapter 1 (commencing with section 1) and sections 3111 and 3221
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change

This section provides an employer a credit applied against the Social Security Tax (SST) and the Railroad Retirement Tax (RRT) for each calendar quarter in an amount equal to 100% of the qualified sick leave wages paid by such employer with respect to such calendar quarter, subject to certain limitations. For purposes of this section, the term “qualified sick leave wages” means wages, defined by IRC section 3121(a), and compensation, defined by IRC section 3231(e), paid by an employer, which is required to be paid by reason of the Emergency Paid Sick Leave Act.

The credit allowed for any calendar quarter is limited to the SST and RRT tax imposed for such calendar quarter, and any excess will be treated as an overpayment that can be refunded under IRC section 6402(a), credits against estimated taxes, and IRC section 6413(b), overpayments of certain employment taxes. The amount of the credit allowed under this provision can be increased by certain employer qualified health plan expenses. In addition, the gross income of the employer for the taxable year that includes the last day of any calendar quarter with respect to which a credit is allowed under this section shall be increased by the amount of such credit. Any wages taken into account in determining the credit allowed under this section shall not be taken into account for purposes of determining the credit allowed under IRC section 45S, the employer credit for paid sick leave.

Employers can elect not to have these provisions apply.

California Impact
Employment taxes are administered by Employment Development Department in California. California conforms to the federal definition of gross income under IRC section 61 as of January 1, 2015. However, California does not conform to the inclusion in income of the new federal credit against excise taxes on employers related to required paid sick leave.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-127, section 7002

Title
Families First Coronavirus Response Act, Credit for Sick Leave for Certain Self-Employed Individuals
Federal Effective Date
3/18/2020
Federal Operative Date
Days occurring during the period beginning on 4/1/2020 through 12/31/2020 can be included in determining the qualified sick leave equivalent amount. (IRS Notice 20-21)
Background
JCT Report, JCX-10-20, p. 12-14
IRC Section
Uncodified, affecting IRC Subtitle A (commencing with section 1) and section 1401
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change

This section provides a refundable income tax credit to eligible self-employed individuals for any taxable year for an amount equal to qualified sick leave equivalent amount, as defined. An eligible self-employed individual is one who carries on any trade or business and would be entitled to receive paid leave during the taxable year pursuant to the Emergency Paid Sick Leave Act (EPSLA) if the individual were an employee of an employer (other than the individual themselves).

The term “qualified sick leave equivalent amount” means an amount equal to the number of days during the taxable year (but not more than the applicable number of days) that the individual is unable to perform services in any trade or business for a reason to which such individual would be entitled to receive sick leave under the EPSLA if the individual were an employee of an employer (other than the individual themselves), multiplied by the lesser of (i) $200 ($511 in the case of any day of paid sick time described in paragraph (1), (2), or (3) of section 5102(a) of the EPSLA), or (ii) 67% (100% in the case of any day of paid sick time described in paragraph (1), (2), or (3) of section 5102(a) of the EPSLA) of the average daily self-employment income of the individual for the taxable year. The term “average daily self-employment income” means an amount equal to the net earnings from self-employment of the individual for the taxable year, divided by 260.

The term “applicable number of days” means, with respect to any taxable year, the excess (if any) of 10 days over the number of days taken into account in determining the qualified sick leave equivalent amount in all preceding taxable years.

An eligible self-employed individual must maintain such documentation as prescribed by the Secretary of the Treasury (or the Secretary’s delegate) to qualify for the credit. In addition, this section denies a double benefit in the case of an individual who receives wages or compensation paid by an employer, which are required to be paid by reason of the EPSLA.

California Impact
California does not conform to the new federal credit against income taxes for sick leave for certain self-employed individuals.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-127, section 7003

Title
Families First Coronavirus Response Act, Payroll Credit for Required Paid Family Leave
Federal Effective Date
3/18/2020
Federal Operative Date
Applies to qualified family leave wages paid during the period beginning 4/1/2020 through 12/31/2020 (IRS Notice 20-21)
Background
JCT Report, JCX-10-20, p. 15-18
IRC Section
Uncodified, affecting IRC Chapter 1 (commencing with section 1) and sections 3111 and 3221
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change

This section provides an employer a credit applied against the Social Security Tax (SST) and the Railroad Retirement Tax (RRT) for each calendar quarter in an amount equal to 100% of the qualified family leave wages paid by such employer with respect to such calendar quarter. For purposes of this credit, the amount of qualified family leave wages taken into account with respect to any individual cannot exceed for any day (or portion thereof) for which the individual is paid qualified family leave wages, $200, and, in the aggregate, with respect to all calendar quarters, cannot exceed $10,000.

The credit allowed for any calendar quarter is limited to the SST and RRT tax imposed for such calendar quarter, and any excess will be treated as an overpayment that can be refunded under IRC section 6402(a), credits against estimated taxes, and IRC section 6413(b), overpayments of certain employment taxes. The amount of the credit allowed under this provision can be increased by certain employer qualified health plan expenses.

For purposes of this section, the term “qualified family leave wages” means wages, defined by IRC section 3121(a), and compensation, defined by IRC section 3231(e), paid by an employer, which is required to be paid by reason of the Emergency Family and Medical Leave Expansion Act, including amendments made by this Act.

In addition, the gross income of the employer for the taxable year, which includes the last day of any calendar quarter with respect to which a credit is allowed under this section, shall be increased by the amount of such credit. Any wages taken into account in determining the credit allowed under this section shall not be taken into account for purposes of determining the credit allowed under IRC section 45S, the employer credit for paid family and medical leave.

Employers can elect not to have these provisions apply.

California Impact
Employment taxes are administered by the Employment Development Department in California. Since California income and franchise tax law does not conform to this provision, the inclusion in income of the new federal credit against excise taxes on employers related to required paid family leave will not be included in the determination of the employers’ California gross income.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-127, section 7004

Title
Families First Coronavirus Response Act, Credit for Family Leave for Certain Self-Employed Individuals
Federal Effective Date
3/18/2020
Federal Operative Date
Days occurring during the period beginning on 4/1/2020 through 12/31/2020 can be included in determining the qualified family leave equivalent amount (IRS Notice 20-21)
Background
JCT Report, JCX-10-20, p. 19
IRC Section
Uncodified, affecting IRC Subtitle A (commencing with section 1)
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change

This section provides a refundable income tax credit for an eligible self-employed individual for any taxable year an amount equal to 100% of the qualified family leave equivalent amounts, as defined. An eligible self-employed individual is one who carries on any trade or business and would be entitled to receive paid leave during the taxable year pursuant to the Emergency Family and Medical Leave Expansion Act (EFMLEA) if the individual were an employee of an employer (other than the individual themselves).

The term “qualified family leave equivalent amount” means an amount equal to the product of the number of days (not to exceed 50) during the taxable year that the individual is unable to perform services in any trade or business for a reason to which such individual would be entitled to receive paid leave under the EFMLEA if the individual were an employee of an employer (other than the individual themselves), multiplied by the lesser of: (i) 67% of the average daily self-employment income of the individual for the taxable year, or (ii) $200. The term “average daily self-employment income” means an amount equal to the net earnings from self-employment income of the individual for the taxable year, divided by 260.

An eligible self-employed individual must maintain such documentation as prescribed by the Secretary of the Treasury (or the Secretary’s delegate) to qualify for the credit. In addition, this section denies a double benefit in the case of an individual who receives wages or compensation paid by an employer, which are required to be paid by reason of the EFMLEA. In this case, the qualified family leave equivalent amount would be reduced (but not below $0) to the extent that the sum of the qualified family leave equivalent amount and the wages described in PL 116-127, section 7003(b)(1) for the Payroll Credit for Required Paid Family Leave, exceeds $10,000.

California Impact
California does not conform to the new federal credit against income taxes for family leave for certain self-employed individuals.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-127, section 7005

Title
Families First Coronavirus Response Act, Special Rule Related to Tax on Employers
Federal Effective Date
3/18/2020
Federal Operative Date
3/18/2020
Background
JCT Report, JCX-10-20, p. 22
IRC Section
Uncodified, affecting IRC Chapter 1 (commencing with section 1) and sections 3111 and 3221
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change
This section provides that any wages required to be paid by reason of the Emergency Paid Sick Leave Act or the Emergency Family and Medical Leave Expansion Act shall not be considered wages for purposes of IRC section 3111(a) (the Social Security Tax (SST)) or compensation for purposes of IRC section 3221(a) (the Railroad Retirement Tax (RRT)). In addition, the credits allowed by sections 7001 and 7003 of this Act shall each be increased by the amount of the tax imposed by IRC section 3111(b) on qualified sick leave wages or qualified family leave wages, for which credit is allowed under such section 7001 or 7003 (respectively). Any amount of credit increase under this section is subject to the same denial of double benefit, and therefore gross income inclusion, as provided in sections 7001 and 7003.
California Impact
Employment taxes are administered by the Employment Development Department in California. California conforms to the federal definition of gross income under IRC section 61 as of January 1, 2015. However, California does not conform to the inclusion in gross income of the new federal credit against excise taxes on employers related to required paid sick leave or paid family leave.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 1106

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Loan Forgiveness
Federal Effective Date
3/27/2020
Federal Operative Date
3/27/2020
Background
JCT Report, JCX-12R-20, p.104
IRC Section
Uncodified, affecting IRC sections 61 and 265
California Conforms?
The California Legislature has passed a law that provides an exclusion from gross income for amounts of covered loans that are forgiven under section 1106, like the exclusion in section 1106(i).
Relevant RTC Sections
17071, 17131.8, 24271, 24308.6
Summary of Federal Change
This section provides that a recipient is eligible for forgiveness of indebtedness on a covered loan equal to the sum of payments made and cost incurred during the covered period for the following: 1) Payroll cost; 2) Any payment of interest on any covered mortgage obligation (Any indebtedness or debt instrument incurred in the ordinary course of business that is a liability of the borrower, is a mortgage on personal or real property, and was incurred before 2/15/2020)
California Impact
California generally conforms to IRC section 61 pursuant to RTC sections 17071 and 24271 as of 1/1/2015, except as otherwise provided. For taxable years beginning on or after 1/1/2020, sections 17131.8 and 24308.6 were added to the RTC to exclude from gross income, for state income tax purposes, any covered loan amount forgiven pursuant to this federal act section. (Added by Stats. 2020, Ch. 39, Sec. 2. (AB 1577).)
Revenue Impact
20/21 21/22 22/23 23/24
Conformed in 2020 Conformed in 2020 Conformed in 2020 Conformed in 2020

Details of Public Law 116-136, section 2201

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, 2020 Recovery Rebates for Individuals
Federal Effective Date
3/27/2020
Federal Operative Date
3/27/2020
Background
JCT Report, JCX-12R-20, pp. 3-12
IRC Section
6211, 6213, 6428
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change
All U.S. residents with adjusted gross income up to $75,000 ($150,000 married, $112,500 head of household), who are not a dependent of another taxpayer and have a work eligible social security number, were eligible for a $1,200 ($2,400 married) rebate, in the form of a refundable credit against income taxes that was advanced. In addition, they are eligible for an additional $500 per child. The rebate amount is reduced by 5% of the taxpayer’s adjusted gross income that exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.
California Impact
The federal recovery rebate is treated as an advance refundable credit, so it is not included in income for state or federal purposes. (See FTB Legal Ruling 2001-3.)
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2202

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Special Rules for Use of Retirement Funds
Federal Effective Date
3/27/2020
Federal Operative Date
Operative for coronavirus-related distributions, as defined, made on or after 1/1/ 2020, and before 12/31/ 2020
Background
JCT Report, JCX-12R-20, pp. 12-16
IRC Section
72
California Conforms?
Yes
Relevant RTC Sections
17071, 17081, 17085, 17085.7, 17501, 24271, 24601
Summary of Federal Change
Consistent with previous disaster-related relief, the provision waives the 10% early withdrawal tax for distributions up to $100,000 from qualified retirement accounts for coronavirus-related purposes made on or after January 1, 2020 and before December 31, 2020. In addition, income attributable to such distributions would be subject to tax over 3 years, and the taxpayer may recontribute the funds to an eligible retirement plan within 3 years without regard to that year’s cap on contributions. Further, the provision provides flexibility for loans from certain retirement plans for coronavirus-related relief. A coronavirus-related distribution is a distribution made to an individual: (1) who is diagnosed with COVID-19, (2) whose spouse or dependent is diagnosed with COVID-19, or (3) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary.
California Impact

California conforms to IRC section 72(t), additional tax on early distributions from qualified plans tax as applicable for federal purposes for the same taxable year using a rate of 2 1/2% in lieu of the federal tax rate. The COVID-19 early distributions would not be subject to a California early withdrawal tax if they are not subject to the federal additional tax on early distributions. (RTC section 17085(c))

RTC section 17081 conforms to federal law regarding loans from qualified plans as of 1/1/2015, and generally allows a qualified employer plan, to provide specified loans to a participant or a beneficiary that are not treated as taxable distributions from the plan if specified conditions are met.

AB 276 was chaptered on 9/11/2020 to conform to Section 2202(b) of the federal CARES Act, relating to qualified retirement plan loans.

Revenue Impact
20/21 21/22 22/23 23/24
Conformed in 2020 Conformed in 2020 Conformed in 2020 Conformed in 2020

Details of Public Law 116-136, section 2203

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Temporary Waiver of Required Minimum Distribution Rules for Certain Retirement Plans and Accounts
Federal Effective Date
3/27/2020
Federal Operative Date
These provisions apply for calendar years after 12/31/2019, and applies to amendments to any plan or annuity contract made pursuant to the amendments that are made by this section and made on or before the last day of the first plan year beginning on or after 1/1/ 2022
Background
JCT Report, JCX-12R-20, pp. 16-20
IRC Section
401, 402
California Conforms?
Yes
Relevant RTC Sections
17501, 24601
Summary of Federal Change

The provision waives the required minimum distribution rules for certain defined contribution plans and IRAs for calendar year 2020. This provision provides relief to individuals who would otherwise be required to withdraw funds from such retirement accounts during that year.

If all or a portion of a calendar year 2020 distribution that would have been a required minimum distribution is instead an eligible rollover distribution, the distribution (or portion thereof) is not treated as an eligible rollover distribution for purposes of the direct rollover and notice requirements, or the mandatory 20-percent income tax withholding for eligible rollover distributions.

California Impact
Under RTC sections 17501 and 24601, California automatically conforms to the federal changes made to IRC sections 401 and 402. As a result, the federal provision that waives required minimum distributions for calendar year 2020, automatically applies under California law.
Revenue Impact
20/21 21/22 22/23 23/24
Baseline Baseline Baseline Baseline

Details of Public Law 116-136, section 2204

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Allowance of Partial Above the Line Deduction for Charitable Contributions
Federal Effective Date
3/27/2020
Federal Operative Date
The amendments made by this section apply to taxable years beginning after 12/31/ 2019
Background
JCT Report, JCX-12R-20, pp. 20-23
IRC Section
62
California Conforms?
No
Relevant RTC Sections
17024.5, 17072
Summary of Federal Change
The provision allows an above the line deduction up to $300 for charitable cash contributions to specified charitable organizations in 2020 to an individual that doesn't itemize their deductions.
California Impact

California conforms to the definition of adjusted gross income under IRC section 62, as of the specified date of 1/1/2015, with modifications, but does not conform to the allowance of this partial above the line deduction for charitable contributions.

Therefore, a taxpayer would not be entitled to the same deduction at the state level.

Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2205

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Modification of Limitations on Charitable Contributions During 2020
Federal Effective Date
3/27/2020
Federal Operative Date
The provision applies to taxable years ending after 12/31/2019
Background
JCT Report, JCX-12R-20, pp. 23-26
IRC Section
170
California Conforms?
No
Relevant RTC Sections
17201, 17275.2, 17275.3, 17275.5, 24357 – 24359.1
Summary of Federal Change
The provision increases the limitations on deductions for charitable contributions by individuals who itemize, as well as corporations. For individuals, the 50% of adjusted gross income limitation is suspended for 2020. For corporations, the 10% limitation is increased to 25% of taxable income. This provision also increases the limitation on deductions for contributions of food inventory from 15% to 25%. Contributions that exceed the applicable percentages may be carried forward for up to five years. A qualified contribution means a charitable contribution made in cash during the 2020 calendar year to which the taxpayer has elected to apply this section.
California Impact

Under the PITL, California generally conforms to the federal charitable contribution rules under IRC section 170 as of the specified date of 1/1/2015, and as a result, does not conform to the provisions related to increased limitations and carryovers for charitable contributions that were made during 2020.

Under the CTL, California does not conform to IRC section 170, but instead has standalone law that is generally similar to federal law allowing corporations a deduction for charitable contributions. There are no similar provisions for the increased charitable contribution limitations and carryovers for contributions made during 2020.

Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2206

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Exclusion for Certain Employer Payments of Student Loans
Federal Effective Date
3/27/2020
Federal Operative Date
Operative for payments made after 3/27/2020 and before 1/1/2021
Background
JCT Report, JCX-12R-20, pp. 26- 29
IRC Section
127, 221
California Conforms?
No
Relevant RTC Sections
17131, 17151
Summary of Federal Change
The provision enables employers to provide a student loan repayment benefit to employees on a tax-free basis. Under the provision, an employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment would be excluded from the employee’s income. The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer under current law. The provision applies to any student loan payments made by an employer on behalf of an employee after date of enactment and before 1/1/2021.
California Impact
California does not conform to federal rules relating to educational assistance programs under IRC section 127, but has stand-alone language in RTC section 17151 corresponding to IRC section 127. As a result, California does not conform to the federal exclusion for certain employer payments of student loans.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2301

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Employee Retention Credit for Employers Subject to Closure Due to COVID-19
Federal Effective Date
3/27/2020
Federal Operative Date
Operative for wages paid after 3/ 12/2020, and before1/1/2021
Background
JCT Report, JCX-12R-20, pp. 30-43
IRC Section
Uncodified provision impacting IRC sections 3111 and 3221
California Conforms?
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision provides a refundable payroll tax credit for 50% of wages paid by employers to employees after March 12, 2020, and before January 1, 2021. The credit is applied against applicable employment taxes (Old-Age Survivors, and Disability Insurance and Railroad Retirement Tax Act. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shutdown order, or (2) gross receipts declined by more than 50% when compared to the same quarter in the prior year and ending the next quarter with an amount of gross receipts that is greater than 80% of the gross receipts for the same quarter in the prior year. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to either of the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit if the employer has experienced one of the COVID-19 related circumstances. The credit is provided for the first $10,000 of compensation, including health benefits, paid to each employee.
California Impact
The FTB does not administer employment taxes. Employment taxes are administered by the Employment Development Department.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2302

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Delay of Payment of Employer Payroll Taxes
Federal Effective Date
3/27/2020
Federal Operative Date
Operative for payments deferred beginning on 3/27/2020 and before 1/1/2021.
Background
JCT Report, JCX-12R-20, pp. 43-50
IRC Section
Uncodified provisions affecting IRC sections 1401, 3111, 3211, 3221, 6654
California Conforms?
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees or themselves. Employers generally are responsible for paying a 6.2% Social Security tax on employee wages. The provision requires that the deferred employment tax be paid over the following 2 years, with half of the amount required to be paid by 12/31/2021 and the other half by 12/31/2022. The Social Security Trust Funds will be held harmless under this provision.
California Impact
The FTB does not administer employment taxes. Employment taxes are administered by the Employment Development Department.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2303

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Modifications for Net Operating Losses
Federal Effective Date
3/27/2020
Federal Operative Date

The provision suspending application of the 80% taxable income limitation applies to taxable years beginning after 12/31/2017, and to taxable years beginning on or before 12/31/2017, to which NOL arising in taxable years beginning after 12/31/2017, are carried.

The provision modifying the rules relating to carrybacks applies to NOLs arising in taxable years beginning after 12/31/2017, and taxable years beginning before, on, or after such date to which such NOLs are carried.

The technical amendments made by the provision are effective as if included in section 13302 of PL 115-97.

Background
JCT Report, JCX-12R-20, pp. 50-55
IRC Section
172 and 860E
California Conforms?
No
Relevant RTC Sections
17201, 17276-17276.22, 24416-24416.22
Summary of Federal Change

This provision suspended the application of the 80% taxable income limitation for taxable years beginning after 12/31/2017, and before 1/1/2021. The 80% taxable income limitation continues to apply in the case of any taxable year beginning after 12/31/2020. The 80% taxable income limitation was also eliminated for net operating losses (NOLs) arising in taxable years beginning after 12/31/2017, and carried to such a taxable year.

The CARES Act also modified the rules regarding carrybacks for NOLs arising in 2018, 2019, and 2020. Specifically, any NOL arising in a taxable year beginning after 12/31/2017, and before 1/1/2021, may be carried back to the 5 taxable years preceding the taxable year of such loss.

California Impact

In general, California allows a taxpayer to calculate an NOL in accordance with federal rules, but has not conformed to the federal changes that apply to taxable years beginning after 12/31/2017 because California conforms to the Internal Revenue Code as of 1/1/2015.

NOLs attributable to taxable years beginning on or after 1/1/2008, may be carried forward 20 years. For NOLs attributable to taxable years beginning before 1/1/2013, and after 12/31/2018, NOL carrybacks are unavailable. California conforms to the federal NOL carryback rules for NOLs attributable to taxable years beginning on or after 1/1/2013, and before 1/1/2019, with modifications.

AB 85 was chaptered on 6/29/2020, and it includes provisions to suspend the use of NOL deductions. The suspension does not apply to taxpayers with a net business income or modified adjusted gross income of less than $1 million under the PITL or for taxpayers with income subject to tax under the CTL of less than $1 million for taxable years 2020, 2021, and 2022. This provision also extends the carryover period for NOL deductions disallowed under this provision.

Therefore, the 80-percent taxable income limitation is not applicable in California and any NOL arising in a taxable year beginning after 12/31/2017, and before 1/1/2021, may not be carried back.

Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2304

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Modification of Limitation on Losses for Taxpayers Other than Corporations
Federal Effective Date
3/27/2020
Federal Operative Date
The provision suspending the disallowance of excess business loss is operative for taxable years beginning after 12/31/2017. The technical amendments to IRC section 461(l) made by the provision are operative as if included in section 11012 of PL 115-97 for taxable years beginning after 12/31/2017.
Background
JCT Report, JCX-12R-20, pp. 55-59
IRC Section
461
California Conforms?
No
Relevant RTC Sections
17551, 17560.5, 24681
Summary of Federal Change
The provision suspends the disallowance of excess business loss applicable to pass-through businesses and sole proprietors for taxable years beginning after 12/31/2017 and before 1/1/21. This provision also made several technical amendments to IRC section 461.
California Impact
California has modified conformity to IRC section 461(l), relating to limitation on excess business losses on noncorporate taxpayers, for taxable years beginning after December 31, 2018. For California purposes, losses are treated as an excess business loss carryover to the following taxable year as opposed to a net operating loss carryover under IRC section 172. Therefore, California does not conform to the federal changes in Section 2304 of PL 116-136. (RTC sections 17560.5 and 24681) .
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2305

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Modification of Credit for Prior Year Minimum Tax Liability of Corporations
Federal Effective Date
3/27/2020
Federal Operative Date
This provision is operative for taxable years beginning after 12/ 31/ 2017
Background
JCT Report, JCX-12R-20, pp. 59-60
IRC Section
53
California Conforms?
No
Relevant RTC Sections
17063, 23453
Summary of Federal Change
The provision increases the limitation on the minimum tax credit for a corporation by the Alternative Minimum Tax (AMT) refundable credit amount for only taxable years that begin in 2018 or 2019, not 2020 and 2021. The AMT refundable credit amount is equal to 100% of the excess of the amount of minimum tax credit under IRC section 53(b) over the amount of minimum tax credit under IRC section 53(a) for taxable years beginning in 2019, instead of 2021. A corporation can elect to make its minimum tax credit fully refundable for its first taxable year beginning in 2018. The taxpayer may file an application for a tentative refund of the amount due pursuant to making that election, and the refund shall be treated as if made under IRC section 6411, relating to tentative carryback and refund adjustments. The provision accelerates the ability of companies to recover the corporate AMT credit, permitting companies to claim a refund.
California Impact
For corporations, California conforms to IRC section 53 as of 1/1/2015 with modifications (RTC section 23453). Therefore, California does not conform to this section regarding the federal accelerated recovery of AMT credits.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2306

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Modification of Limitation on Business Interest
Federal Effective Date
3/27/2020
Federal Operative Date
This section is operative for taxable years beginning after 12/31/ 2018.
Background
JCT Report, JCX-12R-20, pp. 61-67
IRC Section
163
California Conforms?
No
Relevant RTC Sections
17024.5, 17201, 23051.5, 24344, 24344.7
Summary of Federal Change
The provision temporarily increases the amount of interest that businesses are allowed to deduct on their tax returns, by increasing the 30% limitation to 50% of taxable income (with adjustments) for 2019 and 2020. This provision also allows a taxpayer to elect to use their 2019 adjusted taxable income instead of the 2020 adjusted taxable income, which could also increase limitation on the business interest deduction.
California Impact
California conforms, under the PITL and the CTL, to the federal rules for the deduction of interest under IRC section 163, as of the specified date of 1/1/2015, with modifications, but did not conform to the federal limitations on deductions of business interest. California also does not conform to the federal modification of the limitations on business interest.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2307

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Technical Amendments Regarding Qualified Improvement Property
Federal Effective Date
3/27/2020
Federal Operative Date
This section is operative as if included in section 13204 of the Tax cuts and Jobs Act ( PL 115-97).
Background
JCT Report, JCX-12R-20, pp. 67-71
IRC Section
168
California Conforms?
No
Relevant RTC Sections
17201, 17250, 24349
Summary of Federal Change
This section makes technical changes, clarifying the classification of specific property, to the amendments to IRC section 168 that were made by the Tax Cuts and Jobs Act.
California Impact
California does not conform, under the PITL, to IRC section 168(e)(3), relating to the definition and classification of qualified leasehold improvement, qualified restaurant, and qualified retail improvement property. As a result, the federal modifications to eliminate the separate definitions of qualified leasehold improvement, qualified restaurant, and qualified retail improvement property, and provide a general 15-year recovery period for qualified improvement property, were not applicable, and the technical amendments regarding qualified improvement property are also not applicable.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 2308

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Temporary Exception from Excise Tax for Alcohol Used to Produce Hand Sanitizer
Federal Effective Date
3/27/2020
Federal Operative Date
Applies to distilled spirits removed after 12/31/2019, and before 1/1/2021.
Background
JCT Report, JCX-12R-20, pp. 71-72
IRC Section
5214
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision waives the federal excise tax on any distilled spirits used for or contained in hand sanitizer that is produced and distributed in a manner consistent with guidance issued by the Food and Drug Administration and is effective for calendar year 2020.
California Impact
FTB does not administer excise taxes.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 3516

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Technical Amendments
Federal Effective Date
3/27/2020
Federal Operative Date
This section is operative as if included in the Fostering Undergraduate Talent by Unlocking Resources for Education Act or the “FUTURE Act” (P.L. 116–91)
Background
JCT Report, JCX-12R-20, pp. 73-76
IRC Section
6103
California Conforms?
No
Relevant RTC Sections
19542-19547, 19549, 19551-19555, 19559, 19561, 19562, 19565
Summary of Federal Change
Makes technical amendments to IRC section 6103, relating to confidential disclosure of returns and return information.
California Impact
California has standalone provisions related to disclosure of confidential information.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 3606

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Advanaced Refunding of Credits
Federal Effective Date
3/27/2020
Federal Operative Date
Applies to qualified family leave wages paid during the period beginning 4/1/2020 and on or before 12/31/2020 (IRS Notice 20-21)
Background
JCT Report, JCX-12R-20, pp. 77-81
IRC Section
Uncodified, affecting IRC section 3111 and 3221 by amending sections 7001 and 7003 of the Families First Coronavirus Response Act, (Public Law 116-127).
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change
The Families First Coronavirus Response Act allows a portion of the credits allowed against the Social Security tax and the Railroad Retirement tax to be refundable. This provision allows the refundable portion of the credit to be advanced to the taxpayer.
California Impact
FTB does not administer these types of employment taxes. However, under sections 7001 and 7003 of the Families First Coronavirus Response Act, payroll taxes are required to be included in the employer’s gross income for income tax purposes.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 3607

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Expansion of Department of Labor Authority to Postpone Certain Deadlines
Federal Effective Date
3/27/2020
Federal Operative Date
3/27/2020
Background
JCT Report, JCX-12R-20, pp. 81-82
IRC Section
N/A
California Conforms?
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The Secretary of Labor’s authority to postpone certain deadlines under Employee Retirement Income Security Act of 1974 (ERISA) is extended to include a public health emergency declared by the Secretary of Housing and Human Services.
California Impact
Federal ERISA provisions apply to pension plans in California. N/A is included under the California Conforms and IRC sections because federal law preempts California law.
Revenue Impact
20/21 21/22 22/23 23/24
Baseline Baseline Baseline Baseline

Details of Public Law 116-136, section 3608

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Single-Employer Plan Funding Rules
Federal Effective Date
3/27/2020
Federal Operative Date
3/27/2020
Background
JCT Report, JCX-12R-20, pp. 83-90
IRC Section
Uncodified provisions, affecting IRC sections 430 and 436
California Conforms?
Partially
Relevant RTC Sections
17501, 24601
Summary of Federal Change

This provision extends the due date to January 1, 2021, for certain required minimum contributions to single-employer defined benefit pension plans that would be due during the 2020 calendar year. The amount of each required minimum contribution is increased by the interest accruing between the original due date and the payment date.

In addition, a plan sponsor can elect to treat the plan’s adjusted funding target attainment percentage for the last plan year ending before January 1, 2020, as the adjusted funding target attainment percentage for plan years that include calendar year 2020.

California Impact

The Personal Income Tax Law (PITL) automatically conforms to federal changes made to IRC sections 430 and 436. As a result, the federal modifications to single-employer plan funding rules automatically apply under California law.

However, the Corporate Income Tax Law (CTL) conforms to federal changes made to IRC sections 430 and 436, as of the specified date, January 1, 2015. The legislature hasn’t passed a law that would conform to this provision. As a result, CA doesn’t conform under the CTL to the federal modifications to single-employer plan funding rules in this provision.

Revenue Impact
20/21 21/22 22/23 23/24
Baseline Baseline Baseline Baseline

Details of Public Law 116-136, section 3609

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Application of Cooperative and Small Employer Charity Pension Plan Rules to Certain Charitable Employers Whose Primary Exempt Purpose is Providing Services with Respect to Mothers and Children
Federal Effective Date
3/27/2020
Federal Operative Date
The provision is applicable to plan years beginning after December 31, 2018
Background
JCT Report, JCX-12R-20, pp. 90-95
IRC Section
414
California Conforms?
Yes
Relevant RTC Sections
17501, 24601
Summary of Federal Change
Expands the definition of cooperative and small employer charity pension plans under IRC section 414 (y)(1).
California Impact
The PITL and CTL automatically conform to federal changes made to IRC section 414. As a result, the federal modifications that apply the cooperative and small employer charity pension plan rules to certain charitable employers whose primary exempt purpose is providing services with respect to mothers and children automatically apply under California law.
Revenue Impact
20/21 21/22 22/23 23/24
Baseline Baseline Baseline Baseline

Details of Public Law 116-136, section 3701

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Exemption for Telehealth Services
Federal Effective Date
3/27/2020
Federal Operative Date
This provision is operative for plan years beginning on or before December 31, 2021
Background
JCT Report, JCX-12R-20, pp. 96-97
IRC Section
223
California Conforms?
No
Relevant RTC Sections
17215.4
Summary of Federal Change
For plan years beginning on or before December 31, 2021, a high deductible health plan is permitted to provide telehealth and other remote care services without satisfaction of the plan’s minimum deductible. In other words, a health plan will still be considered a high deductible health plan even if it fails to require a deductible for telehealth and other remote care services for those play years.
California Impact
California specially does not conform to federal health savings accounts, and does not conform to the exemption for telehealth services.
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-136, section 3702

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Inclusion of Certain Over-The-Counter Medical Products as Qualified Medical Expenses
Federal Effective Date
3/27/2020
Federal Operative Date

The provision applies to distributions from HSAs and MSAs for amounts paid after December 31, 2019.

The provision applies to reimbursements from health FSAs and HRAs for expenses incurred after December 31, 2019.

Background
JCT Report, JCX-12R-20, pp. 98-100
IRC Section
105, 106, 220, and 223
California Conforms?
No
Relevant RTC Sections
17024.5, 17131, 17131.4, 17201, 17215, 17215.1, and 17215.4
Summary of Federal Change

The Joint Committee on Taxation, Description of the Tax Provisions of Public Law 116-136 states:

This provision amends the definition of qualified medical expense for Archer Medical Savings Arrangements (MSAs) to permit distributions for over-the-counter medicine and menstrual care products.

The provision also amends the definition of qualified medical expense for health Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs) to permit reimbursements for expenses incurred for over-the-counter medicine and menstrual care products.

California Impact
Health Savings Accounts (HSAs)
California does not conform to any of the federal HSA provisions. Thus, contributions to an HSA are not excludable or deductible under California law.
Flexible Spending Arrangements (FSAs)
California conforms to FSAs as of the “specified date” of January 1, 2015. Thus, California does not conform to the inclusion within qualified medical expenses for FSA purposes of amounts paid for menstrual care products.
Archer Medical Savings Accounts (MSAs)
California conforms to Archer MSAs as of the “specified date” of January 1, 2015, with modifications. California law allows an Archer MSA contribution deduction equal to the amount deducted on the federal return for the same taxable year; however, because California conforms to the federal amount of qualified medical expenses as of the “specified date,” California does not conform to the inclusion within qualified medical expenses for Archer MSA purposes of amounts paid for menstrual care products.
Revenue Impact
20/21 21/22 22/23 23/24
N/A $ (32,000,000) $ (25,000,000) $ (26,000,000)

Details of Public Law 116-136, section 4003

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Emergency Relief and Taxpayer Protections
Federal Effective Date
3/27/2020
Federal Operative Date
3/27/2020
Background
JCT Report, JCX-12R-20, p.105
IRC Section
Uncodified, affecting IRC section 382
California Conforms?
No
Relevant RTC Sections
17024.5, 17321, 17323, 23051.5, 24451, 24458, 24459, and 24472
Summary of Federal Change
The Joint Committee on Taxation, Description of the Tax Provisions of Public Law 116-136 states: The provision authorizes the Secretary of the Treasury, to provide loans to eligible businesses, States, and municipalities related to losses incurred as a result of COVID-19. It also directs the Secretary to prescribe guidance providing that the acquisition of warrants, stock options, common or preferred stock or other equity under the provision does not result in an ownership change for purposes of IRC section 382.These loans will be treated as indebtedness for the purposes of the IRC.
California Impact
California did not pass a law conforming to the changes made in section 4003 of PL 116-136. As a result, California does not conform to any guidance providing that the acquisition of warrants, stock options, common or preferred stock or other equity under this federal provision does not result in an ownership change for purposes of IRC section 382. To the extent that this section relates to Net Operating Losses, California conforms to IRC section 382, relating to limitation on net operating loss carryforwards and certain built-in losses following ownership change, as of the “specified date” of January 1, 2015, with modifications. California law specifically provides that IRS Notice 2008-83, 2008-42 I.R.B. 905, issued October 20, 2008, shall not be applicable for CTL purposes with respect to any ownership change occurring at any time.
Revenue Impact
20/21 21/22 22/23 23/24
Baseline Baseline Baseline Baseline

Details of Public Law 116-136, section 4007

Title
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Suspension of Certain Aviation Excise Taxes
Federal Effective Date
3/27/2020
Federal Operative Date
The suspension of these excise taxes applies from March 28, 2020 through December 31, 2020.
Background
JCT Report, JCX-12R-20, pp. 101-103
IRC Section
Uncodified, affecting IRC sections 4041, 4081, 4083, 4261, 4271, and 6427
California Conforms?
No
Relevant RTC Sections
N/A
Summary of Federal Change
This section suspends excise taxes imposed on amounts paid for commercial air passenger and freight transportation and on fuels used in commercial and noncommercial aviation to fund the Airport and Airway Trust Fund from 3/28/2020 through 12/31/2020.
California Impact
N/A
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-139, section 101

Title
Paycheck Protection Program and Health Care Enhancement Act, Amendments to the Paycheck Protection Program, Economic Injury Disaster Loans, and Emergency Grants
Federal Effective Date
4/24/2020
Federal Operative Date
4/24/2020
Background
JCT Report, JCX-12R-20, p. 104
IRC Section
Uncodified, amends Division A of the CARES Act (PL 116-136)
California Conforms?
No
Relevant RTC Sections
17071, 17131.8, 24271, 24308.6
Summary of Federal Change
This bill increased the funding available for the Paycheck Protection Program and the Emergency Economic Injury Disaster Loan (EIDL) Grants, expanded eligibility for EIDLs and Emergency EIDL Grants, and provided an amount set aside for insured depository institutions, credit unions, and community financial institutions.
California Impact
California generally conforms to IRC section 61 pursuant to RTC sections 17071 and 24271 as of 1/1/2015, except as otherwise provided. Although California does not conform to the loan programs pursuant to the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act (PPPHCE Act) (PL 116-139), or the Paycheck Protection Program Flexibility Act of 2020 (PPPF Act) (PL 116-142), California does conform to the exclusion from gross income of any forgiven loan amounts under these programs. For taxable years beginning on or after 1/1/2020, sections 17131.8 and 24308.6 were added to the RTC to exclude from gross income any covered loan amounts forgiven pursuant to the CARES Act, the PPPHCE Act, or the PPPF Act. In addition, any deduction or credit otherwise allowable under these sections are reduced by the amount of the exclusion allowed. (Added by Stats. 2020, Ch. 39, Sec. 2. (AB 1577).)
Revenue Impact
20/21 21/22 22/23 23/24
Conformed in 2020 Conformed in 2020 Conformed in 2020 Conformed in 2020

Details of Public Law 116-142, section 3

Title
Paycheck Protection Program Flexibility Act of 2020, Amendments to Paycheck Protection Program Loan Forgiveness
Federal Effective Date
3/27/2020
Federal Operative Date
Applies to loans made pursuant to SBA Section 7(a)(36) or CARES Act Section 1109
Background
JCT Report, JCX-12R-20, p. 104
IRC Section
Uncodified, affecting IRC sections 61 and 265
California Conforms?
No
Relevant RTC Sections
17071, 17131.8, 24271, 24308.6
Summary of Federal Change
This bill modified provisions of the Small Business Act (SBA) and the CARES Act (PL 116-136) related to the forgiveness of loans made to small businesses under the Paycheck Protection Program. The bill extended the covered period during which a loan recipient may use such funds for certain expenses, while remaining eligible for forgiveness, from 2/15/2020 through 12/31/2020.
California Impact
California generally conforms to IRC section 61 pursuant to RTC sections 17071 and 24271 as of 1/1/2015, except as otherwise provided. Although California does not conform to the loan programs pursuant to the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act (PPPHCE Act) (PL 116-139), or the Paycheck Protection Program Flexibility Act of 2020 (PPPF Act) (PL 116-142), California does conform to the exclusion from gross income of any forgiven loan amounts under these programs. For taxable years beginning on or after 1/1/2020, sections 17131.8 and 24308.6 were added to the RTC to exclude from gross income any covered loan amounts forgiven pursuant to the CARES Act, the PPPHCE Act, or the PPPF Act. In addition, any deduction or credit otherwise allowable under these sections are reduced by the amount of the exclusion allowed. (Added by Stats. 2020, Ch. 39, Sec. 2. (AB 1577).)
Revenue Impact
20/21 21/22 22/23 23/24
Conformed in 2020 Conformed in 2020 Conformed in 2020 Conformed in 2020

Details of Public Law 116-142, section 4

Title
Paycheck Protection Program Flexibility Act of 2020, Delay of Payment of Employer Payroll Taxes
Federal Effective Date
N/A
Federal Operative Date
N/A
Background
JCT Report, JCX-12R-20, p. 43
IRC Section
Uncodified, affecting IRC section 3111
California Conforms?
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
Not Administered by FTB
California Impact
N/A
Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 272

Title
Consolidated Appropriations Act, 2021, Additional 2020 Recovery Rebates for Individuals
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 784
IRC Section
6428A
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
Under the provision, all US residents with adjusted gross income of up to $75,000 ($112,500 for head of household and $150,000 for married individuals filing joint returns) who are not a dependent of another taxpayer, and have a valid social security number, are eligible for a $600 rebate check ($1,200 for married individuals filing joint returns), plus an additional $600 per child. The rebate amount is reduced by $5 for each $100 of income that exceeds the phase-out threshold.
California Impact

The federal recovery rebate is treated as an advance refundable credit, so it is not included in income for state or federal purposes. (See FTB Legal Ruling 2001-3.)

California has authorized its own stimulus program called the Golden State Stimulus (GSS).

Senate Bill 88 (Stats. 2021, Ch. 8), as amended by Assembly Bill 88 (Stats. 2021, Ch. 12), authorizes the California State Controller to make a one-time GSS tax refund payment to qualified recipients in the amount of either $600 or $1,200. A qualified recipient shall not receive more than one payment.

Revenue Impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 273

Title
Consolidated Appropriations Act, 2021, Amendments to Recovery Rebates under the CARES Act
Federal Effective Date
03/27/2020
Federal Operative Date
03/27/2020
Background
Consolidated Appropriations Act, 2021, page 795
IRC Section
Uncodified, affecting the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), and IRC Subtitle A (commencing with section 1) and section 6428
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision adds the surviving spouse filing status to the $150,000 adjusted gross income joint filing status recovery rebate phase-out. The provision also makes technical changes to the CARES Act and IRC section 6428 relating to recovery rebates for individuals.
California Impact

The federal recovery rebate is treated as an advance refundable credit, so it is not included in income for state or federal purposes. (See FTB Legal Ruling 2001-3.)

California has authorized its own stimulus program called the Golden State Stimulus (GSS).

Senate Bill 88 (Stats. 2021, Ch. 8), as amended by Assembly Bill 88 (Stats. 2021, Ch. 12), authorizes the California State Controller to make a one-time GSS tax refund payment to qualified recipients in the amount of either $600 or $1,200. A qualified recipient shall not receive more than one payment.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 274

Title
Consolidated Appropriations Act, 2021, Extension of Certain Deferred Payroll Taxes
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 797
IRC Section
Uncodified, affecting Internal Revenue Service Notice 2020-65
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change

Internal Revenue Service Notice 2020-65 allows employers to defer the withholding and payment of the employee share of social security tax ordinarily due during the period beginning on 9/1/2020 and ending on 12/31/2020, for employees with earnings below a threshold amount. The IRS notice indicates employers that defer the withholding and payment of taxes in 2020 must withhold and pay the deferred taxes ratably over the period beginning on 1/1/2021 and ending on 4/30/2021. Interest, penalties, and additions to tax on the deferred taxes will begin to accrue on 5/1/2021.

The provision changes the deferred withholding and payment of taxes ending date from 4/30/2021 to 12/31/2021, and changes the interest, penalties, and additions to tax begin date from 5/1/2021 to 1/1/2022.

California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 275

Title
Consolidated Appropriations Act, 2021, Regulations or Guidance Clarifying Application of Educator Expense Tax Deduction
Federal Effective Date
12/27/2020
Federal Operative Date
Expenses paid or incurred after 3/12/2020
Background
Consolidated Appropriations Act, 2021, page 797
IRC Section
Uncodified, affecting IRC section 62
California Conforms
No
Relevant RTC Sections
17072
Summary of Federal Change
The provision requires the Secretary of the Treasury to issue guidance or regulations providing that personal protective equipment and other supplies used for the prevention of the spread of COVID-19 are treated as eligible expenses for purposes of the educator expense deduction.
California Impact
California specifically does not conform to IRC section 62(a)(2)(D), relating to an above-the-line deduction for certain expenses of elementary and secondary school teachers. (RTC section 17072(b).)
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 276

Title
Consolidated Appropriations Act, 2021, Clarification of Tax Treatment of Forgiveness of Covered Loans
Federal Effective Date
12/27/2020
Federal Operative Date

The original Payroll Protection Program (PPP) loan provision is effective for taxable years beginning after 3/27/2020

The subsequent PPP loans provision is effective for taxable years ending after 12/27/2020

Background
Consolidated Appropriations Act, 2021, page 798
IRC Section
Uncodified, affecting the Small Business Act, section 7A, and IRC sections 61, 265, 705, 1017, and 1366
California Conforms
No
Relevant RTC Sections
17071, 17131.8, 17280, 24271, 24308.6, 24425
Summary of Federal Change
The provision clarifies that gross income does not include any amount of income that would otherwise arise from the forgiveness of an original PPP loan. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of an original PPP loan that is forgiven, and that the tax basis and other tax attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. The provision provides similar treatment for subsequent PPP loans.
California Impact

California generally conforms to IRC section 61 pursuant to RTC section 17071, under the PITL, and section 24271, under the CTL, as of 1/1/2015, except as otherwise provided.

For taxable years beginning on or after 1/1/2020, sections 17131.8 and 24308.6 were added to the RTC to exclude from gross income, for state income tax purposes, any covered loan amount forgiven pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 1106(i), and to reduce by the amount of such exclusion any credit or deduction otherwise allowed for amounts paid or incurred using the excluded amount.

In addition, California does not conform to IRC section 265, regarding expenses and interest relating to tax-exempt income, but instead has stand-alone language that disallows certain deductions related to tax exempt income under RTC sections 17280 and 24425.

However, California does not conform to the allowance of deductions for expenses paid with the amounts not included in income by this section, or the provision stating tax basis and other tax attributes will not be modified as a result of those amounts being excluded from gross income.

Revenue impact
20/21 21/22 22/23 23/24
$ (170,000,000) $ (3,100,000,000) $ (1,600,000,000) $ (950,000,000)

Details of Public Law 116-260, section 277

Title
Consolidated Appropriations Act, 2021, Emergency Financial Aid Grants
Federal Effective Date
03/27/2020
Federal Operative Date
Emergency financial aid grants made on or after 3/27/2020
Background
Consolidated Appropriations Act, 2021, page 799
IRC Section
Uncodified, affecting the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) section 3504, and IRC Subtitle A (commencing with section 1) and sections 25A, 61
California Conforms
No
Relevant RTC Sections
17071, 17131.8, 24271, 24308.6
Summary of Federal Change

Under the provision, certain emergency financial aid grants under the CARES Act and other emergency financial aid grants that provide relief during the coronavirus emergency are excluded from the gross income of college and university students.

In addition, grants excluded from gross income will not be considered for purposes of the determining the amount of the American Opportunity and Lifetime Learning tax credits allowed to an individual.

Also, the exclusion does not apply to payment received for teaching, research, or other services required as a condition of the grant.

California Impact

California generally conforms to IRC section 61 pursuant to RTC sections 17071, under the PITL, and section 24271, under the CTL, as of 1/1/2015, except as otherwise provided.

California does not conform to the federal exclusion from gross income of emergency financial aid grants, and also does not conform to the federal American Opportunity and Lifetime Learning tax credits.

Revenue impact
20/21 21/22 22/23 23/24
N/A $ (26,000,000) $ 0 $ 0

Details of Public Law 116-260, section 278

Title
Consolidated Appropriations Act, 2021, Clarification of Tax Treatment of Certain Loan Forgiveness and other Business Financial Assistance
Federal Effective Date
12/27/2020
Federal Operative Date

The provisions related to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, including PPP-related provisions, Economic Injury Disaster Loan (EIDL) advances, and subsidies for certain loan payments under the CARES Act are effective for taxable years ending after 3/27/2020.

The provision relating to grants for shuttered venue operators is effective for taxable years ending after 12/27/2020.

The provision relating to EIDL advances under Division N, Title III, section 331 (Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act) is effective for taxable years beginning after 12/27/2020.

Background
Consolidated Appropriations Act, 2021, page 799
IRC Section
Uncodified, affecting CARES Act, sections 1109, 1110, and 1112, and IRC sections 61, 265, 705, 1017, and 1366.
California Conforms
No
Relevant RTC Sections
17071, 17131.8, 17280, 24271, 24308.6, 24425
Summary of Federal Change
The provision clarifies that gross income does not include forgiveness of certain loans, emergency EIDL grants, and certain loan repayment assistance as provided by the CARES Act. In addition, this provision includes forgiveness of grants for shuttered venue operators. The provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the amounts not included in income by this section, and that tax basis and other tax attributes will not be modified as a result of those amounts being excluded from gross income.
California Impact

California generally conforms to IRC section 61 pursuant to RTC sections 17071 and 24271 as of 1/1/2015, except as otherwise provided. For taxable years beginning on or after 1/1/2020, sections 17131.8 and 24308.6 were added to the RTC to exclude from gross income, for state income tax purposes, any covered loan amount forgiven pursuant to the CARES Act section 1106(i), and to reduce by the amount of such exclusion any credit or deduction otherwise allowed for amounts paid or incurred using the excluded amount.

In addition, California does not conform to IRC section 265, regarding expenses and interest relating to tax-exempt income, but instead has stand-alone language that disallows certain deductions related to tax exempt income under RTC sections 17280 and 24425.

California does not conform to the forgiveness of certain loans, emergency EIDL grants, and certain loan repayment assistance as provided by the CARES Act under this provision, nor to forgiveness of grants for shuttered venues. California also does not conform to the allowance of deductions for expenses paid with the amounts not included in income by this section, or the provision stating tax basis and other tax attributes will not be modified as a result of those amounts being excluded from gross income.

Revenue impact
20/21 21/22 22/23 23/24
$ (42,000,000) $ (250,000,000) $ (170,000,000) $ (85,000,000)

Details of Public Law 116-260, section 279

Title
Consolidated Appropriations Act, 2021, Authority to Waive Certain Information Reporting Requirements
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 801
IRC Section
Uncodified, affecting various sections of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), sections 276(b), 277, and 278 of the Act, and IRC Subtitle F, Chapter 61 (commencing with section 6012)
California Conforms
Partially
Relevant RTC Sections
18631
Summary of Federal Change
The provision allows the IRS to waive information return reporting requirements, such as Form 1099 reporting, for certain items specifically excluded from gross income under the Consolidated Appropriations Act, 2021 and the CARES Act.
California Impact
California does not conform by reference to IRC sections requiring information returns be filed, but instead provides in RTC section 18631 that a copy of certain federal information returns are required to be filed with FTB upon request. If an information return is no longer required to be filed with the IRS, FTB would not have authority to request a copy of the federal information return.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 280

Title
Consolidated Appropriations Act, 2021, Application of Special Rules to Money Purchase Pension Plans
Federal Effective Date
03/27/2020
Federal Operative Date

Operative for coronavirus-related distributions, as defined, made on or after

1/1/2020, and before 12/31/2020.

Background
Consolidated Appropriations Act, 2021, page 801
IRC Section
Uncodified, affecting the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2202, and IRC section 72
California Conforms
Yes
Relevant RTC Sections
17071, 17081, 17085, 17085.7, 17501, 24271, 24601
Summary of Federal Change
This section clarifies that money purchase pension plans are included in the retirement plans qualifying for the temporary rules that provide for penalty-free withdrawals from certain retirement plans for coronavirus-related expenses, payment of the associated tax over three years, and the allowance of taxpayers to recontribute withdrawn funds.
California Impact
California conforms to IRC section 72(t), additional tax on early distributions from qualified plans tax as applicable for federal purposes for the same taxable year using a rate of 2 1/2 percent in lieu of the federal tax rate. The coronavirus-related early distributions would not be subject to a California early withdrawal tax if they are not subject to the federal additional tax on early distributions. (RTC section 17085(c).)
Revenue impact
20/21 21/22 22/23 23/24
Baseline Baseline N/A N/A

Details of Public Law 116-260, section 281

Title
Consolidated Appropriations Act, 2021, Election to Waive Application of Certain Modifications to Farming Losses
Federal Effective Date
03/27/2020
Federal Operative Date
The provision modifying the rules relating to carrybacks applies to a net operating loss (NOL) arising in taxable years beginning after 12/31/2017. The provision modifying the rules relating to NOL limitations applies to taxable years beginning after 12/31/2017, and taxable years beginning on or before such date to which NOLs arising in taxable years beginning after such date are carried.
Background
Consolidated Appropriations Act, 2021, page 802
IRC Section
Uncodified, affecting the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2303, and IRC sections 172 and 860E
California Conforms
No
Relevant RTC Sections
17201, 17276-17276.22, 24416-24416.22
Summary of Federal Change
This section allows farmers who elected a two-year NOL carryback prior to the CARES Act to elect to retain that two-year carryback rather than apply the five-year carryback provided in the CARES Act. This section also allows farmers who previously waived an election to carryback a net operating loss to revoke the waiver. These clarifications eliminate unnecessary compliance burdens for farmers.
California Impact

In general, California allows a taxpayer to calculate an NOL in accordance with federal rules, but has not conformed to the federal changes that apply to taxable years beginning after 12/31/2017 because California conforms to the IRC as of 1/1/2015, with modifications.

NOLs attributable to taxable years beginning on or after 1/1/2008, may be carried forward 20 years. For NOLs attributable to taxable years beginning before 1/1/2013, and after 12/31/2018, NOL carrybacks are unavailable. California conforms to the federal NOL carryback rules for NOLs attributable to taxable years beginning on or after 1/1/2013, and before 1/1/2019, with modifications.

AB 85 was chaptered on 6/29/2020, and it includes provisions to suspend the use of NOL deductions. The suspension does not apply to taxpayers with a net business income or modified adjusted gross income of less than $1 million under the PITL or for taxpayers with income subject to tax under the CTL of less than $1 million for taxable years 2020, 2021, and 2022. This provision also extends the carryover period for NOL deductions disallowed under this provision.

Therefore, the 80-percent taxable income limitation is not applicable in California and any NOL arising in a taxable year beginning after 12/31/2017, and before 1/1/2021, may not be carried back.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 283

Title
Consolidated Appropriations Act, 2021, Disclosures to Identify Tax Receivables Not Eligible for Collection Pursuant to Qualified Tax Collection Contracts
Federal Effective Date
12/27/2020
Federal Operative Date
Disclosures made on or after 12/27/2020
Background
Consolidated Appropriations Act, 2021, page 803
IRC Section
6103, 7213
California Conforms
No
Relevant RTC Sections
19542 - 19572
Summary of Federal Change

The provision amends section 1106 of the Social Security Act, and IRC section 6103(k) to:

1. Direct the Commissioner of Social Security to enter into an agreement with the Secretary of the Treasury to indicate as to whether an individual receives disability insurance benefits or supplemental security income benefits, with appropriate safeguards to assure that such information is used solely for the Treasury’s determination of the exclusion of such individuals from its private debt collection program;

2. Require the Secretary to pay the Commissioner’s full costs (including systems and administrative costs) of providing the information in 1; and

3. Allow the Secretary to disclose the taxpayer identity and date of birth to Social Security Administration (SSA) officers, employees, and contractors so that SSA can provide the information in 1.

California Impact

California does not currently conform to IRC section 6103. However, with respect to federal tax information, the FTB is subject to the confidentiality and disclosure rules of IRC section 6103.

California law contains confidentiality and disclosure rules specifically applicable to state tax information.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 284

Title
Consolidated Appropriations Act, 2021, Modification of Certain Protections for Taxpayer Return Information
Federal Effective Date
Disclosures made after 12/19/2019
Federal Operative Date
Disclosures made after 12/19/2019
Background
Consolidated Appropriations Act, 2021, page 804
IRC Section
6103
California Conforms
No
Relevant RTC Sections
19542 - 19572
Summary of Federal Change
The provision allows the Internal Revenue Service to share tax return information of student aid applicants, their parents, students, and borrowers with the Department of Education. It also allows such information be disclosed to colleges, universities, and certain scholarship organizations. The shared information is subject to taxpayer confidentiality protections under IRC section 6103.
California Impact

California does not currently conform to IRC section 6103. However, with respect to federal tax information, the FTB is subject to the confidentiality and disclosure rules of IRC section 6103.

California law contains confidentiality and disclosure rules specifically applicable to state tax information.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 285

Title
Consolidated Appropriations Act, 2021, 2020 Election to Terminate Transfer Period for Qualified Transfers from Pension Plan for Covering Future Retiree Costs
Federal Effective Date
12/27/2020
Federal Operative Date
For taxable years beginning after the date of a one-time election to terminate the transfer period for pension plans to cover future retiree costs, that is made during taxable years beginning after 12/31/2019 and before 12/31/2021
Background
Consolidated Appropriations Act, 2021, page 807
IRC Section
420
California Conforms
Yes
Relevant RTC Sections
17501, 24601
Summary of Federal Change
This provision would allow employers to make a one-time election during taxable years beginning after 12/31/2019 and before 12/31/2021 to end any existing transfer period for any taxable year beginning after the date of election, provided the maintenance of effort continues to apply as if the transfer period were not shortened, the employer ensures the plan stays at least 100 percent funded throughout the original transfer period, the plan has funding targets for the first five years after the original transfer period, and all amounts left in the retiree benefits account at the end of the shortened transfer period must be returned to the pension plan (without application of an excise tax to such amounts).
California Impact
Under RTC sections 17501 and 24601, California automatically conforms to the federal changes made to IRC section 420. As a result, the federal provision that allows an election, made during taxable years beginning after 12/31/2019 and before 12/31/2021, to terminate the transfer period for qualified transfers from pension plans to cover future retiree costs, which applies to taxable years beginning after the election date, automatically applies under California law.
Revenue impact
20/21 21/22 22/23 23/24
Baseline Baseline N/A N/A

Details of Public Law 116-260, section 286

Title
Consolidated Appropriations Act, 2021, Extension of Credits for Paid Sick and Family Leave
Federal Effective Date
03/18/2020
Federal Operative Date
Various, see Summary of Federal Change
Background
Consolidated Appropriations Act, 2021, page 808
IRC Section
Uncodified, affecting Families First Coronavirus Response Act (FFCRA), sections 7001-7004, and IRC sections 1401, 3111, and 3221
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends, on a voluntary basis, the period ending dates for paid sick and family leave tax credits from 12/31/2020 to 3/31/2021. These credits are discussed in more detail in sections 7001-7004 of the Families First Coronavirus Response Act within this report.
California Impact
FTB does not administer the payroll tax laws related to this section, and does not conform to the refundable income tax credits for self-employed individuals.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 288

Title
Consolidated Appropriations Act, 2021, Certain Technical Improvements to Credits for Paid Sick and Family Leave
Federal Effective Date
03/18/2020
Federal Operative Date
Applies to qualified family leave wages paid during the period beginning 4/1/2020 through 3/31/2021.
Background
Consolidated Appropriations Act, 2021, page 811
IRC Section
Uncodified, affecting Families First Coronavirus Response Act (FFCRA), sections 7001 and 7003, and IRC sections 3111 and 3221
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision makes technical changes coordinating the definitions of qualified wages for purposes of the paid sick and family leave tax credits. For more information on these credits, see sections 7001 and 7003 of the Families First Coronavirus Response Act in this report.
California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 304

Title
Consolidated Appropriations Act, 2021, Additional Eligible Expenses
Federal Effective Date
12/27/2020
Federal Operative Date
Allows loans made under Payroll Protection Program (PPP) before, on, or after 12/27/2020, to utilize funds for additional forgivable expenses, except for borrowers who have already had their loans forgiven.
Background
Consolidated Appropriations Act, 2021, page 812
IRC Section
Uncodified, affecting the Small Business Act, sections 7 and 7A, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, sections 1106 and 1109, and IRC sections 61 and 265
California Conforms
No
Relevant RTC Sections
17071, 17131.8, 24271, 24308.6
Summary of Federal Change

The provision makes the following expenses allowable and forgivable under the PPP:

  • Covered operations expenditures. Payment for any software, cloud computing, and other human resources and accounting needs.
  • Covered property damage costs. Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance or other compensation.
  • Covered supplier costs. Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.
  • Covered worker protection expenditure. Operating or capital expenditures to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to coronavirus during the period between 3/1/2020, and the end of the national emergency declaration.
California Impact
California generally conforms to IRC section 61 pursuant to RTC sections 17071, under the PITL, and 24271, under the CTL, as of 1/1/2015, except as otherwise provided. For taxable years beginning on or after 1/1/2020, sections 17131.8 and 24308.6 were added to the RTC to exclude from gross income, for state income tax purposes, any covered loan amount forgiven pursuant to section 1106 of the CARES Act. However, California does not conform to the revised list of allowable and forgivable expenses provided by this provision.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 421

Title
Consolidated Appropriations Act, 2021, Assistance for Providers of Transportation Services Affected by COVID-19
Federal Effective Date
12/27/2020
Federal Operative Date
Certain transportation services beginning 12/27/2020, and ending the later of 3/31/2021 or the date in which all authorized funds are expended, but not later than 12/27/2023.
Background
Consolidated Appropriations Act, 2021, page 880
IRC Section
Uncodified, affecting IRC section 3111
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision authorizes economic assistance to motorcoach and bus operators, school bus companies, flag passenger vessel operators, like passenger ferries, and other transportation service providers in the US. The provision allows assistance for payment of “payroll costs,” and specifies that these costs do not include (i) any compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the covered period; (ii) any tax imposed or withheld under chapter 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period; (iii) any compensation of an employee whose principal place of residence is outside the United States; (iv) any qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act; (v) any qualified family leave wages for which a credit is allowed under section 7003 of that Act; or (vi) any bonus, raise in excess of inflation, or other form of additional employee compensation.
California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 501

Title
Consolidated Appropriations Act, 2021, Emergency Rental Assistance
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 888
IRC Section
Uncodified, affecting IRC section 61
California Conforms
No
Relevant RTC Sections
17071, 24271
Summary of Federal Change

The provision allocates $25 billion for fiscal year 2021 for the new federal Emergency Rental Assistance program to provide financial assistance and housing stability services to certain eligible households. Financial assistance for eligible households requires that at least 90 percent of the funds received be used for:

  • Rent,
  • Rental arrears,
  • Utilities and home energy costs,
  • Utilities and home energy cost arrears, and
  • Other expenses related to housing that are incurred either directly or indirectly due to COVID-19.

No more than 10 percent of the funds can be used by grantees for housing stability services including providing case management and other services related to COVID-19.

Eligible households may receive up to 12 months of funding, plus an additional three months if necessary to ensure housing stability, and subject to the availability of funds. The payments that are made on behalf of eligible households will not be considered income and are not regarded as a resource for purposes of determining the eligibility of the household or any member of the household for benefits or assistance, under any federal program, or federally funded state or local program.

Eligible households may generally only received three months prospective rent payments, but may receive additional prospective rent payments, subject to the availability of funds and the 12 month maximum. Rent in arrears must be provided for first, after which prospective rent payments can be made.

An eligible household is defined as one or more individuals who are obligated to pay rent on a residential dwelling, and one or more such individuals:

  1. Qualifies for unemployment benefits, or has experienced a reduction in household income, incurred significant costs, or other financial hardship caused by COVID-19,
  2. At least one of the individuals demonstrates a risk of homelessness or housing instability, and
  3. The household income is not more than 80 percent of the area median household income.

Applications for rental assistance must be considered first if either an eligible household’s income is at or below 50 percent of the area median income, or one or more members in the household is unemployed for 90 days or more before the submission date of the application.

California Impact

California generally conforms to the federal definition of gross income, with modifications, as of the specified date of 1/1/2015.

Senate Bill 91, Chaptered 1/29/2021, establishes the State Rental Assistance Program to allocate federal rental assistance funds provided pursuant to the federal Emergency Rental Assistance program describe above, and uses the federal definition of eligible household. Under Section 50897.1(j)(1) of the Health and Safety Code, the bill exempts any assistance provided from income, for purposes of the PITL or used to determine eligibility for an eligible household, or any member of an eligible household, for any state program or local program financed wholly or in part by state funds.

Senate Bill 91 is effective immediately and operative for taxable years beginning on or after 1/1/2021.

Assembly Bill 81, Chaptered 2/23/2021, makes several non-substantive technical and conforming changes to Section 50897.1 of the Health and Safety Code. Assembly Bill 81 is effective immediately and operative for taxable years beginning on or after 1/1/2021.

California exempts the assistance payments provided by the federal Emergency Rental Assistance program from California taxable income for taxable years beginning on or after 1/1/2021. In addition, forgiveness of rent liability under this provision is not included in taxable income for taxable years beginning on or after 1/1/2020 and before 1/1/2025.

Revenue impact
20/21 21/22 22/23 23/24
Baseline Baseline N/A N/A

Details of Public Law 116-260, section 512

Title
Consolidated Appropriations Act, 2021, Great Lakes St. Lawrence Seaway Development Corporation
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1575
IRC Section
9505
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
This provision amends IRC section 9505 by renaming the “Saint Lawrence Seaway Development Corporation” as the “Great Lakes St. Lawrence Seaway Development Corporation” for purposes of the Harbor Maintenance Trust Fund, which is a trust fund in the US Treasury.
California Impact
FTB does not administer the laws related to this section
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 102

Title
Consolidated Appropriations Act, 2021, Health Insurance Requirements Regarding Surprise Medical Billing
Federal Effective Date
12/27/2020
Federal Operative Date
Plan years beginning on or after 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1577
IRC Section
9815, 9816, 9817, 9822, 223
California Conforms
No
Relevant RTC Sections
17201, 17215.4
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision requires group health plans to implement certain procedures to prevent surprise medical bills, which can result from the use of out-of-network medical providers.

California Impact
California specially does not conform to health savings accounts under IRC section 213, and does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 103

Title
Consolidated Appropriations Act, 2021, Determination of Out-Of-Network Rates to be Paid by Health Plans; Independent Dispute Resolution Process
Federal Effective Date
12/27/2020
Federal Operative Date
Various
Background
Consolidated Appropriations Act, 2021, page 1616
IRC Section
9816
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

The provision determines certain of out-of-network rates to be paid by group health plans, and provides for an independent dispute resolution process.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 105

Title
Consolidated Appropriations Act, 2021, Ending Surprise Air Ambulance Bills
Federal Effective Date
12/27/2020
Federal Operative Date
Operative with respect to plan years beginning on or after 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1650
IRC Section
9817
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision requires group health plans to implement certain procedures to prevent surprise air ambulance bills, which can result from the use of out-of-network medical providers.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 106

Title
Consolidated Appropriations Act, 2021, Reporting Requirements Regarding Air Ambulance Services
Federal Effective Date
12/27/2020
Federal Operative Date
Operative with respect to plan years beginning on or after 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1670
IRC Section
9823
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision requires group health plans to report certain information relating to air ambulance services, including cost data, ambulance bases, aircraft, and the number of ambulance transports.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 107

Title
Consolidated Appropriations Act, 2021, Transparency Regarding In-Network and Out-Of-Network Deductibles and Out-Of-Pocket Limitations
Federal Effective Date
12/27/2020
Federal Operative Date
Operative with respect to plan years beginning on or after 1/1/2022.
Background
Consolidated Appropriations Act, 2021, page 1677
IRC Section
9816
California Conforms
9816
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision establishes requirements that will facilitate transparency regarding certain in-network and out-of-network deductibles and out-of-pocket limitations relating to group health plans.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 111

Title
Consolidated Appropriations Act, 2021, Consumer Protections through Health Plan Requirement for Fair and Honest Advance Cost Estimate
Federal Effective Date
12/27/2020
Federal Operative Date
Operative with respect to plan years beginning on or after 1/1/2022.
Background
Consolidated Appropriations Act, 2021, page 1680
IRC Section
9816
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision establishes requirements for group health plans to provide advance explanations of benefits and a good faith estimate of amounts the plan and the participant or beneficiary must pay relating to costs for medical items and services.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 113

Title
Consolidated Appropriations Act, 2021, Ensuring Continuity of Care
Federal Effective Date
12/27/2020
Federal Operative Date
Operative with respect to plan years beginning on or after 1/1/2022.
Background
Consolidated Appropriations Act, 2021, page 1687
IRC Section
9818
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision establishes requirements for group health plans to provide continuity of care when such plan terminates certain contractual relationships with providers of medical items and services.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 114

Title
Consolidated Appropriations Act, 2021, Maintenance of Price Comparison Tool
Federal Effective Date
12/27/2020
Federal Operative Date
Operative with respect to plan years beginning on or after 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1693
IRC Section
9819
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision establishes requirements for group health plans to offer and maintain certain price comparison guidance tools for individuals enrolled in such plan relating to medical items and services.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 116

Title
Consolidated Appropriations Act, 2021, Protecting Patients and Improving the Accuracy of Provider Directory Information
Federal Effective Date
12/27/2020
Federal Operative Date
Plan years beginning on or after 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1697
IRC Section
9820
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision establishes requirements for group health plans to establish certain verification processes, response protocols, and health care provider and facility databases relating to medical items and services.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 201

Title
Consolidated Appropriations Act, 2021, Increasing Transparency by Removing Gag Clauses on Price and Quality Information
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1709
IRC Section
9824
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision prohibits group health plans to enter into agreements with health care service providers and other related entities that would restrict such plans from providing certain cost or quality of care information to plan participants or beneficiaries

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 203

Title
Consolidated Appropriations Act, 2021, Strengthening Parity in Mental Health and Substance Use Disorder Benefits
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1719
IRC Section
9812
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision requires certain group health plans to perform and document comparative analyses of the design and application of nonqualified treatment limitation requirements, imposed on medical and surgical benefits and on mental health or substance abuse disorder benefits, and to make such analyses available to certain state or federal agencies upon request.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 204

Title
Consolidated Appropriations Act, 2021, Reporting on Pharmacy Benefits and Drug Costs
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1737
IRC Section
9825
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Group health plans are subject to various requirements under Subtitle K of the IRC, which were enacted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Affordable Care Act (ACA).

This provision requires group health plans to report certain information on health plan pharmacy benefits and drug costs relating plan participants and beneficiaries.

California Impact
California does not conform to Subtitle K, Group Health Plan Requirements, of the IRC.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 101

Title
Consolidated Appropriations Act, 2021, Reduction in Medical Expense Deduction Floor
Federal Effective Date
12/27/2020
Federal Operative Date
Taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1858
IRC Section
213
California Conforms
No
Relevant RTC Sections
17201 and 17241
Summary of Federal Change
The provision makes permanent the 7.5 percent of AGI medical expense deduction threshold, which would have expired on 12/31/2020.
California Impact
California conforms, under the PITL, relating to the itemized deduction for unreimbursed medical expenses under IRC section 213, as of the specified date of 1/1/2015, with modifications. California’s modified conformity allows a deduction for the amount of medical expenses unreimbursed by insurance that exceed 7.5 percent of federal AGI. California did not conform to the federal rules that provided a 10 percent threshold for the 2013 through 2016 tax years (other than under certain circumstances). Because this provision makes the federal 7.5 percent threshold permanent, both federal and state income taxes use the 7.5 percent threshold for 2017 and later tax years.
Revenue impact
20/21 21/22 22/23 23/24
Baseline Baseline N/A N/A

Details of Public Law 116-260, section 102

Title
Consolidated Appropriations Act, 2021, Energy Efficient Commercial Buildings Deduction
Federal Effective Date
Property placed in service after 12/31/2020
Federal Operative Date
Property placed in service after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1858
IRC Section
179D
California Conforms
No
Relevant RTC Sections
17257.2
Summary of Federal Change
The provision makes the energy efficient commercial building deduction permanent, with an inflation adjustment for taxable years beginning after 12/31/2020. Also, certain energy construction standards were modified.
California Impact

This provision is not applicable under California Law.

Under the PITL, California specifically does not conform to the federal deduction for energy efficient commercial buildings, and the deduction has not been adopted under the CTL.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 103

Title
Consolidated Appropriations Act, 2021, Benefits Provided to Volunteer Firefighters and Emergency Medical Responders
Federal Effective Date
Taxable years beginning after 12/31/2020
Federal Operative Date
Taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1859
IRC Section
139B
California Conforms
No
Relevant RTC Sections
17131
Summary of Federal Change
The provision makes the income exclusion for qualified state and local tax benefits and qualified payments to volunteer firefighters and emergency medical responders permanent, for taxable years beginning after 12/31/2020.
California Impact
California conforms by reference to Part III of Subchapter B of Chapter 1 of Subtitle A of the IRC, relating to items that are specifically excluded from gross income, as of the “specified date” of January 1, 2015, in RTC section 17131 in the PITL. California has not conformed to the volunteer firefighters and emergency medical responders exclusion.
Revenue impact
20/21 21/22 22/23 23/24
N/A $ (5,500,000) $ (3,400,000) $ (3,400,000)

Details of Public Law 116-260, section 104

Title
Consolidated Appropriations Act, 2021, Transition from Deduction for Qualified Tuition and Related Expenses to Increased Income Limitation on Lifetime Learning Credit
Federal Effective Date
Taxable years beginning after 12/31/2020
Federal Operative Date
Taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1859
IRC Section
25A, 222
California Conforms
No
Relevant RTC Sections
17204.7
Summary of Federal Change
The provision increases the income limitation for the Lifetime Learning Credit to make it the same as the limitation for the American Opportunity Tax Credit. It also repeals the deduction for qualified tuition and related expenses for taxable years beginning after 12/31/2020.
California Impact
California does not conform to the federal American Opportunity and Lifetime Learning tax credits, and under the PITL, specifically does not conform to the federal qualified tuition and related expenses deduction.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 105

Title
Consolidated Appropriations Act, 2021, Railroad Track Maintenance Credit
Federal Effective Date
12/27/2020
Federal Operative Date
For taxable years ending after 12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1860
IRC Section
45G
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision makes this business tax credit permanent, for qualified railroad track maintenance expenditures that are paid or incurred by an eligible taxpayer. The provision also modifies the credit percentage from 50 percent to 40 percent for taxable years beginning after 12/31/2022.
California Impact
California does not conform to the railroad track maintenance credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 106

Title
Consolidated Appropriations Act, 2021, Certain Provisions Related to Beer, Wine, and Distilled Spirits
Federal Effective Date
12/27/2020
Federal Operative Date
Interest costs paid or accrued after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1860
IRC Section
263A, 5001, 5041, 5051, 5212, 5414, 5555
California Conforms
No
Relevant RTC Sections
17201, 24422.3
Summary of Federal Change
The provision permanently excludes the aging periods for beer, wine, and distilled spirits from the production period for purposes of the UNICAP interest capitalization rules.
California Impact

California conforms, under the PITL and CTL, to the federal rules for capitalization and inclusion in inventory for costs of certain expenses, also known as the UNICAP rules, under IRC section 263A, as of the specified date of January 1, 2015, but does not conform to this federal provision that makes permanent the exception to the UNICAP rules for the allocation of interest for the production period for beer, wine, and distilled spirits.

FTB does not administer the laws that affect beer, wine, and distilled spirits.

Revenue impact
20/21 21/22 22/23 23/24
N/A $ (1,000,000) $ (600,000) $ (500,000)

Details of Public Law 116-260, section 107

Title
Consolidated Appropriations Act, 2021, Refunds in Lieu of Reduced Rates for Certain Craft Beverages Produced Outside the US
Federal Effective Date
12/27/2020
Federal Operative Date
Generally, for distilled spirits, beer, and wine brought into the US and removed after 12/31/2022, with various other operative dates
Background
Consolidated Appropriations Act, 2021, page 1864
IRC Section
5001, 5041, 5051, 6038E, 7652
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision states that certain reduced rates for imported distilled spirits, beer, and wine, produced outside of the US, and removed after 12/31/2022, will be administered as refunds by the Department of the Treasury, rather than assessed upon arrival in the U.S. by Customs and Border Protection of the Department of Homeland Security.
California Impact
FTB does not administer the laws related to this section
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 108

Title
Consolidated Appropriations Act, 2021, Reduced Rates Not Allowed for Smuggled or Illegally Produced Beer, Wine, and Spirits
Federal Effective Date
12/27/2020
Federal Operative Date
For distilled spirits, beer, and wine produced after 12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1868
IRC Section
5067, 5068
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision clarifies that certain reduced rates are not available for smuggled or illegally produced distilled spirits, beer, and wine.
California Impact
FTB does not administer the laws related to this section
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 109

Title
Consolidated Appropriations Act, 2021, Minimum Processing Requirements for Reduced Distilled Spirits Rates
Federal Effective Date
12/27/2020
Federal Operative Date
For distilled spirits removed after 12/31/2021
Background
Consolidated Appropriations Act, 2021, page 1868
IRC Section
5001, 5002
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision modifies the definition of processing for purposes of determining certain volume limitations and reduced excise tax rates for distilled spirits that are removed from the US after 12/31/2020.
California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 110

Title
Consolidated Appropriations Act, 2021, Modification of Single Taxpayer Rules
Federal Effective Date
12/27/2020
Federal Operative Date
For beer, wine, and distilled spirits removed after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1868
IRC Section
5001, 5041, 5051
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
This provision modifies the single taxpayer rules for beer, wine, and distilled spirits that are removed after 12/31/2020, by making certain technical changes.
California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 111

Title
Consolidated Appropriations Act, 2021, Look-Thru Rule for Related Controlled Foreign Corporations
Federal Effective Date
12/27/2020
Federal Operative Date
Taxable years beginning after 12/31/2020 and before 1/1/2026, and to taxable years of US shareholders with or within which such taxable years of foreign corporations end.
Background
Consolidated Appropriations Act, 2021, page 1869
IRC Section
954
California Conforms
No
Relevant RTC Sections
25110
Summary of Federal Change
The provision extends the look-thru rule for related controlled foreign corporations to taxable years beginning after 12/31/2020 and before 1/1/2026, and to taxable years of US shareholders with or within which such taxable years of foreign corporations end.
California Impact
California does not conform to subpart F (IRC sections 951 to 965), relating to controlled foreign corporations, except to the extent applicable with respect to water’s-edge elections.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 112

Title
Consolidated Appropriations Act, 2021, New Markets Tax Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Calendar years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1869
IRC Section
45D
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

The new markets tax credit is equal to 39 percent of capital invested by an individual, trust, partnership, or corporation in a qualified community development entity. A qualified community development entity must serve or provide investment capital for low-income communities or persons. The credit allocations for the 2020 calendar year is $5 billion.

The provision extends the $5 billion allocations for the new markets tax credit for each of the calendar years 2021 through 2025, and extends the carryover of any unused allocations for calendar years through 2030.

California Impact
California does not conform to the new markets tax credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 113

Title
Consolidated Appropriations Act, 2021, Work Opportunity Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Applies to individuals who begin work for an employer after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1869
IRC Section
51
California Conforms
No
Relevant RTC Sections
17053.6, 23624
Summary of Federal Change
The provision extends the work opportunity credit to wages paid or incurred to individuals who begin work after 12/31/2020 and on or before 12/31/2025 .
California Impact

California does not conform to the work opportunity credit.

However, California allows a Prison Inmate Labor Tax Credit that is equal to 10 percent of the wages paid to each prisoner who is employed under an approved joint venture with the California Department of Corrections.

The credit amount is based on wages paid to each qualifying employee during the taxable year for the duration of the contract agreement. The credit applies only to wages paid pursuant to a contract agreement, between the director of corrections and the joint venture employer, executed on or before the day the individual begins work for the employer.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 114

Title
Consolidated Appropriations Act, 2021, Exclusion from Gross Income of Discharge of Qualified Principal Residence Indebtedness
Federal Effective Date
12/27/2020
Federal Operative Date
Discharges of indebtedness after 12/31/2020 and before 1/1/2026
Background
Consolidated Appropriations Act, 2021, page 1869
IRC Section
108
California Conforms
No
Relevant RTC Sections
17071, 17131, and 17144.5
Summary of Federal Change

The provision extends for five additional years, before 1/1/2026, the exclusion from gross income for discharges of qualified principal residence indebtedness.

The provision also reduces the acquisition indebtedness limitation from $2,000,000 ($1,000,000 in the case of a married individual filing a separate return) to $750,000 ($375,000 in the case of a married individual filing a separate return) for purposes of the discharge of qualified principal residence indebtedness.

California Impact

California generally conforms to the federal definition of gross income, including income from the discharge of indebtedness, and conformed to the federal rules for the exclusion of discharge-of-indebtedness income by reason of a discharge of qualified principal residence indebtedness (i.e., mortgage forgiveness debt relief), as of the specified date of 1/1/2015, with the modifications described below:

  1. The exclusion does not apply to discharges occurring after 2013.
    1. The California exclusion applies to discharges occurring on or after 1/1/2007, and before 1/1/2014.
    2. The federal exclusion generally applies to discharges occurring on or after 1/1/2007, and before 1/1/2026.
  2. The maximum amount of qualified principal residence indebtedness (i.e., the amount of principal residence indebtedness eligible for the exclusion) is reduced.
    1. The California maximum amount of qualified principal residence indebtedness is $800,000 ($400,000 in the case of a married/registered domestic partner (RDP) individual filing a separate return).
    2. The federal maximum amount of qualified principal residence indebtedness is $2,000,000 ($1,000,000 in the case of a married individual filing a separate return).
  3. The total amount that may be excluded from gross income is limited.
    1. For discharges occurring in 2007 or 2008, California limits the total amount that may be excluded from gross income to $250,000 ($125,000 in the case of a married/RDP individual filing a separate return).
    2. For discharges occurring in 2009, 2010, 2011, 2012, or 2013, California limits the total amount that may be excluded from gross income to $500,000 ($250,000 in the case of a married/RDP individual filing a separate return).
    3. There is no comparable federal limitation in any year.
  4. Interest and penalties are not imposed with respect to 2007, 2009, or 2013 discharges.
    1. California prohibits the imposition of any interest or penalties with respect to discharges of qualified principal residence that occurred during the 2007, 2009, or 2013 taxable years.
    2. There is no comparable federal prohibition.
Revenue impact
20/21 21/22 22/23 23/24
N/A $ (27,000,000) $ (26,000,000) $ (27,000,000)

Details of Public Law 116-260, section 115

Title
Consolidated Appropriations Act, 2021, 7-Year Recovery Period for Motorsports Entertainment Complexes
Federal Effective Date
12/27/2020
Federal Operative Date
Property placed in service after 12/31/2020 and before 1/1/2026.
Background
Consolidated Appropriations Act, 2021, page 1869
IRC Section
168
California Conforms
No
Relevant RTC Sections
17201, 17250, and 24349-24355.4
Summary of Federal Change
The provision extends the seven-year recovery period for a motorsports entertainment complex for five years to apply to property placed in service on or before 12/31/2025.
California Impact

This provision is not applicable under California law.

The PITL conforms to Modified Accelerated Cost Recovery System (MACRS), with modifications. Regarding the recovery period for motorsports entertainment complexes, the PITL conformed to the seven-year recovery period for property placed in service on or after 1/1/2005, and before 12/31/2007, but specifically does not conform to the seven-year recovery period for property placed in service on or after 1/1/2008.

The CTL does not adopt MACRS. Instead, the CTL is generally in substantial conformity to the pre-1981 federal Asset Depreciation Range (ADR) rules that generally allow property to be depreciated based on its useful life. The CTL temporarily adopted the seven-year recovery period for motorsports entertainment complexes, for property placed in service on or after 1/1/2005, and before 12/31/2007. The seven-year recovery period is not allowed for property placed in service on or after 1/1/2008.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 116

Title
Consolidated Appropriations Act, 2021, Expensing Rules for Certain Productions
Federal Effective Date
12/27/2020
Federal Operative Date
Productions that commence after 12/31/2020 and before 1/1/2026
Background
Consolidated Appropriations Act, 2021, page 1870
IRC Section
181
California Conforms
No
Relevant RTC Sections
17201.5, 17250, 17250.5, 24349
Summary of Federal Change
The provision extends the election to treat costs as expenses, and the deduction for such costs, for qualified film, television, and theatrical productions that commence after 12/31/2020 and before 1/1/2026.
California Impact

This provision is not applicable under California law.

Under the PITL and the CTL, California specifically does not conform to the federal election to deduct the cost of any qualifying film and television production in the year the expenditure is incurred in lieu of capitalizing the cost and recovering it through depreciation allowances.

Instead, under both the PITL and the CTL, California generally conforms to the federal income-forecast method to determine the depreciation recovery periods of property such as films, videotapes, television, book rights, patents, master sound recordings, video games, and like items.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 117

Title
Consolidated Appropriations Act, 2021, Oil Spill Liability Trust Fund Rate
Federal Effective Date
12/27/2020
Federal Operative Date
On and after 1/1/2021
Background
Consolidated Appropriations Act, 2021, page 1870
IRC Section
4611
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the Oil Spill Liability Trust Fund financing rate (excise tax) through 12/31/2025.
California Impact
FTB does not administer the laws related to this section
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 118

Title
Consolidated Appropriations Act, 2021, Empowerment Zone Tax Incentives
Federal Effective Date
12/27/2020
Federal Operative Date
For taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1870
IRC Section
1391, 1397A, 1397B
California Conforms
No
Relevant RTC Sections
17053.73, 23626
Summary of Federal Change

The provision modifies and extends the tax incentives to:

  • Extend the period for which an empowerment zone is in effect through 12/31/2025,
  • Eliminate the enhanced IRC section 179 expensing for any property placed in service after 12/31/2020,
  • Eliminate the election to defer gain for the sales of qualified empowerment zone assets for sales in taxable years beginning after 12/31/2020, and
  • Allow an extension of the termination date of an empowerment zone with a 12/31/2020 termination date.
California Impact

California does not conform to empowerment zone tax incentives.

However, California allows a New Employment Tax Credit. This credit is for qualified employers that:

  • Hire qualified full-time employees,
  • Receive a reservation for such employees,
  • Pay wages for work performed by such employees in a designated geographic area (DGA), and
  • Report the credit on a timely filed (including extensions) original return.

FTB provides a searchable database on its website that includes the following information:

  • Employer names,
  • Amount of tax credit claimed,
  • Number of new jobs created for each taxable year.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 119

Title
Consolidated Appropriations Act, 2021, Employer Credit for Paid Family and Medical Leave
Federal Effective Date
12/27/2020
Federal Operative Date
Wages paid in taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1870
IRC Section
45S
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Eligible employers may claim a general business credit equal to 12.5 percent of the amount of wages paid to qualifying employees during any period in which such employees are on family and medical leave if the rate of payment under the program is 50 percent of the wages normally paid to an employee. The credit is increased by 0.25 percentage points (but not above 25 percent) for each percentage point by which the rate of payment exceeds 50 percent. The maximum amount of family and medical leave that may be taken into account with respect to any employee for any taxable year is 12 weeks.

The provision extends the operation of the employer credit for paid family and medical leave 5 years, making the credit inoperative for wages paid in taxable years beginning after December 31, 2025.

California Impact
California does not conform to IRC section 45S, relating to the employer credit for paid family and medical leave, and has no comparable credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 120

Title
Consolidated Appropriations Act, 2021, Exclusion for Certain Employer Payments of Student Loans
Federal Effective Date
12/27/2020
Federal Operative Date
Payments made after 12/31/2020 and before 1/1/2026
Background
Consolidated Appropriations Act, 2021, page 1870
IRC Section
127
California Conforms
No
Relevant RTC Sections
17151
Summary of Federal Change

Section 2202 of the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), enables employers to provide a student loan repayment benefit to employees on a tax-free basis. Under the provision, an employer may contribute up to $5,250 annually toward payment of an employee’s student loans, and such payment would be excluded from the employee’s income. The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer under current law. The CARES Act provision applies to any student loan payments made by an employer on behalf of an employee after date of enactment and before 1/1/2021.

The provision extends the CARES Act exclusion by making it applicable to payments made by an employer on behalf of an employee before 1/1/2026.

California Impact
California does not conform to federal rules relating to educational assistance programs under IRC section 127, but has stand-alone language in RTC section 17151 that allows for the exclusion of gross income of an employee of amounts paid or incurred by their employer, not to exceed $5,250, for education assistance pursuant to an educational assistance program, similar to IRC section 127. As a result, California does not conform to this provision’s extension of the federal exclusion for certain employer payments of student loans.
Revenue impact
20/21 21/22 22/23 23/24
N/A $ (48,000,000) $ (31,000,000) $ (33,000,000)

Details of Public Law 116-260, section 121

Title
Consolidated Appropriations Act, 2021, Extension of Carbon Oxide Sequestration Credit
Federal Effective Date
12/27/2020
Federal Operative Date
12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1870
IRC Section
45Q
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the credit for qualified carbon oxide that is sequestered by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility, the construction of which begins before 1/1/2024, at a qualified facility, the construction of which begins before 1/1/2026.
California Impact
California has no comparable credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 131

Title
Consolidated Appropriations Act, 2021, Credit for Electricity Produced from Certain Renewable Resources
Federal Effective Date
01/01/2021
Federal Operative Date
01/01/2021
Background
Consolidated Appropriations Act, 2021, page 1871
IRC Section
45, 48
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends for one year the renewable electricity production credit and the election to claim the energy credit in lieu of the renewable electricity production credit to facilities that began construction before 1/1/2022.
California Impact
California does not conform to the credits with respect to electricity produced from certain renewable resources.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 132

Title
Consolidated Appropriations Act, 2021, Extension and Phaseout of Energy Credit
Federal Effective Date
01/01/2020
Federal Operative Date
01/01/2020
Background
Consolidated Appropriations Act, 2021, page 1871
IRC Section
48
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

Solar Energy Property

The provision extends the 30-percent energy credit for solar energy property used to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat, excepting use to heat a swimming pool, the construction of which begins before 1/1/2024. However, see below for the phase-out of this energy credit.

Extension of Fiber-Optic Solar Property

The provision extends the 30-percent energy credit for equipment that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight with respect to property the construction of which begins before 1/1/2024. However, see below for the phase-out of this energy credit.

Extension of Fuel Cell Property

The provision extends the 30-percent energy credit for qualified fuel cell property, with respect to property the construction of which begins before 1/1/2024. However, see below for the phase-out of this energy credit.

Extension of Qualified Small Wind Energy Property

The provision extends the 30-percent energy credit for qualified small wind energy property, with respect to property the construction of which begins before 1/1/2024. However, see below for the phase-out of this energy credit.

Extension of Thermal Energy Property

The provision extends the 10-percent energy credit for equipment which uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure, with respect to property the construction of which begins before 1/1/2024.

Extension of Qualified Microturbine Property

The provision extends the 10-percent energy credit for qualified microturbine property, with respect to property the construction of which begins before 1/1/2024.

Extension of Combined Heat and Power System Property

The provision extends the 10-percent energy credit for combined heat and power system property, with respect to property the construction of which begins before 1/1/2024.

Phase-out of 30-Percent Credit Rate for Fiber-Optic Solar, Qualified Fuel Cell, and Qualified Small Wind Energy Property

The provision phases out the 30-percent energy credit for qualified fuel cell property, qualified small wind property, and fiber-optic solar property by reducing the credit percentage for each to 26 percent for any such property placed in service after 12/31/2021, and before 1/1/2023; and to 22 percent for any such property placed in service after 12/31/2022, and before 1/1/2024. Such property that is not placed in service before 1/1/2026, shall not be eligible for an energy credit.

Phase-out of 30-Percent Credit Rate for Solar Energy Property

The provision phases out the 30-percent energy credit for solar energy property by reducing the credit percentage for each to 26 percent for any such property placed in service after 12/31/2021, and before 1/1/2023; and to 22 percent for any such property placed in service after 12/31/2022, and before 1/1/2024. The credit percentage for property that is not placed in service before 1/1/2026, is 10 percent.

California Impact
California does not conform to the federal energy credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 133

Title
Consolidated Appropriations Act, 2021, Treatment of Mortgage Insurance Premiums as Qualified Residence Interest
Federal Effective Date
12/27/2020
Federal Operative Date
For amounts paid or accrued after 12/31/2020.
Background
Consolidated Appropriations Act, 2021, page 1872
IRC Section
163
California Conforms
No
Relevant RTC Sections
17225
Summary of Federal Change
The provision extends the deduction for private mortgage insurance premiums for one year (with respect to contracts entered into after 12/31/2006). Thus, the provision applies to amounts paid or accrued after 12/31/2006, and on or before 12/31/2021.
California Impact
The PITL specifically does not conform to the federal deduction for private mortgage insurance premiums. As a result, private mortgage insurance premiums are not deductible under California law.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 134

Title
Consolidated Appropriations Act, 2021, Credit for Health Insurance Costs of Eligible Individuals
Federal Effective Date
12/27/2020
Federal Operative Date
Months beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1872
IRC Section
35
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends a refundable tax credit for eligible individuals equal to 72.5 percent of the individual’s premiums for qualified health insurance of the individual and qualifying family members for each eligible coverage month beginning before 1/1/2022. The credit is available only with respect to amounts paid by the individual for qualified health insurance.
California Impact
California does not conform to the refundable credit for health insurance costs of eligible individuals.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 135

Title
Consolidated Appropriations Act, 2021, Indian Employment Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1872
IRC Section
45A
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the credit allowed to employers for 20 percent of the excess of qualified wages and health insurance costs of qualified employees during the current taxable year over the amount of such wages and costs incurred by the employer during calendar year 1993 to taxable years beginning before 1/1/2022.
California Impact
California does not conform to the Indian Employment Tax Credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 136

Title
Consolidated Appropriations Act, 2021, Mine Rescue Team Training Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Applies to taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1872
IRC Section
45N
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the mine rescue team training credit to taxable years beginning before 1/1/2022. An eligible employer may claim a general business credit against income tax with respect to each qualified mine rescue team employee equal to the lesser of 20 percent of the amount paid or incurred by the taxpayer during the taxable year with respect to the training program costs of the qualified mine rescue team employee (including the wages of the employee while attending the program) or $10,000.
California Impact
California does not conform to the mine rescue team training credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 137

Title
Consolidated Appropriations Act, 2021, Classification of Certain Race Horses as 3-Year Property
Federal Effective Date
12/27/2020
Federal Operative Date
Property placed in service after 12/31/2020 and before 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1872
IRC Section
168
California Conforms
No
Relevant RTC Sections
17201, 17250, 24349
Summary of Federal Change
The provision extends the use of a three-year recovery period for race horses that are two years old or younger by one year, so that it now applies to race horses placed in service before 1/1/2022.
California Impact

Under the PITL, for taxable years beginning on or after January 1, 2015, California law, as it relates to the Modified Accelerated Recovery System (MACRS) in general, conforms to IRC section 168 as of a specified date of 1/1/2015, with modifications.

For taxable years beginning on or after January 1, 2010, the PITL conformed to the special recovery period that provided that any race horse that was placed in service before 1/1/2014, was assigned a three-year recovery period. The PITL does not conform to any later federal extensions of this special recovery period, and does not conform to this most recent federal extension.

Under the CTL, California does not conform to federal MACRS depreciation. Instead, the CTL is generally in substantial conformity to the pre-1981 federal asset depreciation range (ADR) rules, which generally allow property to be depreciated based on its useful life. The CTL does not conform to this provision.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 138

Title
Consolidated Appropriations Act, 2021, Accelerated Depreciation for Business Property on Indian Reservations
Federal Effective Date
12/27/2020
Federal Operative Date
Property placed in service after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
168
California Conforms
No
Relevant RTC Sections
17201, 17250, 24349-24355.4
Summary of Federal Change
With respect to certain property used in connection with the conduct of a trade or business within an Indian reservation, depreciation deductions under IRC section 168(j) are determined using certain special recovery periods. The provision extends the accelerated depreciation for qualified Indian reservation property for one year for property placed in service on or before 12/31/2021.
California Impact

The PITL generally conforms to the Modified Accelerated Cost Recovery System (MACRS), but specifically does not conform to accelerated depreciation for business property on an Indian reservation.

The CTL does not adopt MACRS. The CTL is generally in substantial conformity to the pre-1981 federal alternative depreciation system (ADS) rules, which generally allow property to be depreciated based on its useful life.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 139

Title
Consolidated Appropriations Act, 2021, American Samoa Economic Development Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
Uncodified, amends Section 119 of Division A of the Tax Relief and Health Care Act of 2006 (PL 109-432)
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the credit for one year to apply in the case of (1) a corporation that is an existing credit claimant with respect to American Samoa and that elected the application of IRC section 936 for its last taxable year beginning before 1/1/2006, to the first 16 taxable years of the corporation, which begin after December 31, 2005, and before January 1, 2022, and (2) any other corporation, to the first 10 taxable years of the corporation, which begin after December 31, 2011, and before January 1, 2022.
California Impact
California does not conform to the American Samoa economic development credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 140

Title
Consolidated Appropriations Act, 2021, Second Generation Biofuel Producer Credit
Federal Effective Date
12/27/2020
Federal Operative Date
For qualified second generation biofuel production after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
40
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the second generation biofuel producer credit, which is a nonrefundable income tax credit for each gallon of qualified second generation biofuel fuel production of the producer for the taxable year. The amount of the credit per gallon is reduced per IRC section 40(b). The provision does not apply to qualified second generation biofuel production after 12/31/2021.
California Impact
California does not conform to the second generation biofuel producer credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 141

Title
Consolidated Appropriations Act, 2021, Nonbusiness Energy Property
Federal Effective Date
12/27/2020
Federal Operative Date
Property placed in service after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
25C
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends for one year, with respect to property placed into service through 12/31/2021, the 10-percent credit for the purchase of qualified energy efficiency improvements to existing homes, and specified credits with certain dollar amounts for the purchase of specific energy efficient property originally placed in service by the taxpayer during the taxable year.
California Impact
California does not conform to the credit for nonbusiness energy property.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 142

Title
Consolidated Appropriations Act, 2021, Qualified Fuel Cell Motor Vehicles
Federal Effective Date
12/27/2020
Federal Operative Date
Property purchased after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
30B
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends the credit for fuel cell vehicles placed in service on or before 12/31/2021. The base credit is $4,000 for vehicles weighing 8,500 pounds or less. Heavier vehicles may qualify for up to a $40,000 credit, depending on their weight. An additional $1,000 to $4,000 credit is available to cars and light trucks to the extent their fuel economy exceeds the 2002 base fuel economy set forth in the IRC.
California Impact
California does not conform to the credit for qualified fuel cell motor vehicles.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 143

Title
Consolidated Appropriations Act, 2021, Alternative Fuel Refueling Property Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Property placed in service after 12/31/2020, and on or before 12/31/2021
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
30C
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends, through 12/31/2021, the 30-percent credit for the cost of installing qualified clean-fuel vehicle refueling property to be used in a trade or business of the taxpayer or installed at the principal residence of the taxpayer. The credit may not exceed $30,000 per taxable year per location, in the case of qualified refueling property used in a trade or business and $1,000 per taxable year per location, in the case of qualified refueling property installed on property which is used as a principal residence.
California Impact
California does not conform to the alternative fuel refueling property credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 144

Title
Consolidated Appropriations Act, 2021, 2-Wheeled Plug-In Electric Vehicle Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Vehicles acquired after 12/31/2020, and before 1/1/2022
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
30D
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
The provision extends, for vehicles acquired before 1/1/2022, a 10-percent credit that is available for qualifying 2-wheeled plug-in electric motorcycles. Qualifying 2-wheeled vehicles needed to have a battery capacity of at least 2.5 kilowatt-hours, be manufactured primarily for use on public streets, roads, and highways, and be capable of achieving speeds of at least 45 miles per hour. The maximum credit for any qualifying vehicle was $2,500.
California Impact
California does not conform to the 2-wheeled plug-in electric vehicle credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 145

Title
Consolidated Appropriations Act, 2021, Production Credit for Indian Coal Facilities
Federal Effective Date
12/27/2020
Federal Operative Date
Coal produced after 12/31/2020, and on or before 12/31/2021
Background
Consolidated Appropriations Act, 2021, page 1873
IRC Section
45
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
Under the credit for electricity produced from certain renewable resources, etc., this provision extends, for coal produced through 12/31/2021, the increased credit amount for the production of Indian coal sold to an unrelated third party, or to a related-party so long as the Indian coal is subsequently sold to an unrelated third person, from a qualified facility for a sixteen-year period beginning 1/1/2006, and ending 12/31/2021. The additional credit amount is $2.00 per ton (adjusted for inflation; $2.570 for 2020).
California Impact
California does not conform to the credit for electricity produced from certain renewable resources, etc., or the additional credit amount for producers of Indian coal.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 146

Title
Consolidated Appropriations Act, 2021, Energy Efficient Homes Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Homes acquired after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1874
IRC Section
45L
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

The provision extends, for homes acquired on or before 12/31/2021, the credit to an eligible contractor for each qualified new energy-efficient home that is constructed by the eligible contractor and acquired by a person from such eligible contractor for use as a residence during the taxable year.

The credit equals $1,000 in the case of a new home that meets the 30-percent standard and $2,000 in the case of a new home that meets the 50-percent standard.

California Impact
California does not conform to the credit for energy-efficient new homes.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 147

Title
Consolidated Appropriations Act, 2021, Extension of Excise Tax Credits Relating to Alternative Fuels
Federal Effective Date
12/27/2020
Federal Operative Date
Applies to fuel sold or used after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1874
IRC Section
6426, 6427
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
This provision extends certain excise tax credits for alternative fuels.
California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 148

Title
Consolidated Appropriations Act, 2021, Extension of Residential Energy-Efficient Property Credit and Inclusion of Biomass Fuel Property Expenditures
Federal Effective Date
12/27/2020
Federal Operative Date
Property placed in service after 12/31/2020, or for qualified biomass fuel property, expenditures paid or incurred in taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1874
IRC Section
25C and 25D
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

The provision extends, for property placed in service on or before 12/31/2023 a personal income tax credit for the purchase of qualified solar electric property and qualified solar water heating property that is used exclusively for purposes other than heating swimming pools and hot tubs. The credit rate is 26 percent for property placed in service after 12/31/2019 and before 1/1/2023, and 22 percent for property placed in service in after 12/31/2022 and before 1/1/2024.

The provision also adds qualified biomass fuel property expenditures to the list of expenditures qualifying for the credit. A qualified biomass fuel property expenditure is an expenditure for property that uses the burning of bio-mass fuel to heat a residence located in the US, or to heat water. The thermal efficiency rating must be at least 75 percent.

California Impact
California does not conform to the credit for nonbusiness energy property.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 149

Title
Consolidated Appropriations Act, 2021, Black Lung Disability Trust Fund Excise Tax
Federal Effective Date
12/27/2020
Federal Operative Date
Applies to sales after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1875
IRC Section
4121
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change
This provision extends the temporary increase termination date from 12/31/2020 to 12/31/2021, for the excise tax imposed on coal from mines in the US.
California Impact
FTB does not administer the laws related to this section.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 201

Title
Consolidated Appropriations Act, 2021, Minimum Low-Income Housing Tax Credit Rate
Federal Effective Date
12/27/2020
Federal Operative Date
Allocations of housing credit dollar amounts and financed obligations issued after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1875
IRC Section
42
California Conforms
No
Relevant RTC Sections
17057.5, 17058, 23610.4, 23610.5
Summary of Federal Change
The provision sets a minimum credit of 4 percent for the low-income housing credit typically used for the rehabilitation of affordable housing.
California Impact
California generally conforms, under the PITL and the CTL, to the low-income housing credit under IRC section 42 as of the specified date of 1/1/2015, with modifications. California does not conform to the federal changes that sets a minimum credit of 4 percent for the low-income housing credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 202

Title
Consolidated Appropriations Act, 2021, Depreciation of Certain Residential Rental Property over 30-Year Period
Federal Effective Date
12/27/2020
Federal Operative Date
Taxable years beginning after 12/31/2017
Background
Consolidated Appropriations Act, 2021, page 1875
IRC Section
Uncodified, affecting the Tax Cuts and Jobs Act, PL 115-97, section 13204 and IRC section 168.
California Conforms
No
Relevant RTC Sections
17201 and 24349
Summary of Federal Change
The provision changes the alternative depreciation system (ADS) recovery period for taxable years beginning after 12/31/2017, to 30 years for residential rental property held by an electing real property trade or business that was placed in service prior 1/1/2018, but that was not subject to ADS prior to that date.
California Impact

California conforms, under the PITL, to IRC section 168(g)(2), relating to the ADS recovery period for residential rental property, as of the specified date of 1/1/2015, but does not conform to the federal change in the recovery period.

California does not conform, under the CTL, to IRC section 168, relating to Modified Accelerated Cost Recovery System (MACRS) depreciation. The CTL has substantially similar language to the pre-1981 ADR deduction. The ADR is based on the “useful life” of depreciable property. As a result, the federal modifications to the recovery periods are not applicable.

Revenue impact
20/21 21/22 22/23 23/24
N/A $ (39,000,000) $ (6,900,000) $ (4,200,000)

Details of Public Law 116-260, section 203

Title
Consolidated Appropriations Act, 2021, Waste Energy Recovery Property Eligible for Energy Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Periods after 12/31/2020, under rules similar to the rules of IRC section 48(m) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990 (PL 101-508)
Background
Consolidated Appropriations Act, 2021, page 1876
IRC Section
48
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

The provision adds waste energy recovery property to the list of types of energy property included in the energy credit and specifies that the 30-percent energy credit would apply to waste energy recovery property.

The provision phases out the 30-percent energy credit by reducing the credit percentage for each to 26 percent for any such property placed in service after 12/31/2021, and before 1/1/2023; and to 22 percent for any such property placed in service after 12/31/2022, and before 1/1/2024. Such property that is not placed in service before 1/1/2026, shall not be eligible for an energy credit.

California Impact
California does not conform to the energy credit, or the application of the credit to waste energy recovery property.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 204

Title
Consolidated Appropriations Act, 2021, Extension of Energy Credit for Offshore Wind Facilities
Federal Effective Date
12/27/2020
Federal Operative Date
Periods after 12/31/2016, under rules similar to the rules of IRC section 48(m) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990 (PL 101-508).
Background
Consolidated Appropriations Act, 2021, page 1876
IRC Section
48
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change
Under the provision, a qualified offshore wind facility may make an election to use the 30-percent energy credit, for property that is placed in service after 2008, if the construction of such facility begins before 1/1/2026. A qualified offshore wind facility is not subject to the energy credit phase-out rules.
California Impact
California does not conform to the qualified offshore wind facility energy credit.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 205

Title
Consolidated Appropriations Act, 2021, Minimum Rate of Interest for Certain Determinations Related to Life Insurance Contracts
Federal Effective Date
12/27/2020
Federal Operative Date
Contracts issued after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1877
IRC Section
7702
California Conforms
No
Relevant RTC Sections
17020.6, 23045
Summary of Federal Change

The provision changes the minimum interest rate used in life insurance policy cash value accumulation tests to “the applicable minimum test rate.”

It also changes the minimum rate used in analyzing life insurance policy premiums to an “applicable guideline premium rate.”

California Impact
Under both the PITL and the CTL, California conforms to the federal life insurance contract definition as of the specified date of January 1, 2015, and as a result, does not conform to the modifications made by this provision.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 206

Title
Consolidated Appropriations Act, 2021, Clarifications and Technical Improvements to CARES Act Employee Retention Credit
Federal Effective Date
03/27/2020
Federal Operative Date

Wages paid after 3/12/2020

In addition, certain amounts from earlier quarters may be claimed in the fourth quarter of 2020. This will apply only for employers that did not apply the law consistently with the retroactive changes.

Background
Consolidated Appropriations Act, 2021, page 1878
IRC Section
Uncodified, amends Section 2301 of the CARES Act and Section 7A of the Small Business Act
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

The provision allows employers that received Paycheck Protection Program (PPP) loans to also claim the employee retention credit (ERC) on qualified wages. However, an employer may not receive a double benefit by claiming the ERC on wages that the employer paid with forgiven and excluded PPP loan proceeds. Also, employers are not allowed to deduct from income the portion of qualified wages that equal the ERC amount.

The provision clarifies that “qualified health plan expenses” paid by an employer are eligible for the ERC even if such health plan costs are attributable to furloughed employees who are not receiving any other wages from their employer.

The provision clarifies that tax-exempt organizations determining eligibility for the ERC under the “gross receipts” test must account for all gross receipts within the meaning of IRC Section 6033, and not only gross receipts from unrelated trade or business activities.

California Impact
FTB does not administer the laws related to this section. Wage deductions that were disallowed under federal law as a result of claiming the federal ERC are allowed as a deduction for California.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 207

Title
Consolidated Appropriations Act, 2021, Extension and Modification of Employee Retention and Rehiring Tax Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Calendar year quarters beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1880
IRC Section
Uncodified, affecting the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), section 2301, and IRC Subtitle A (commencing with section 1) sections 3111 and 3221
California Conforms
N/A
Relevant RTC Sections
N/A
Summary of Federal Change

This provision modifies and extends the employee retention credit (ERC), which is used to reduce Social Security Tax and Railroad Retirement Tax, by increasing the credit from 50 percent to 70 percent of qualified wages that are paid beginning on 3/13/2020 and ending on 6/30/2021. In addition, qualified wages are changed to $10,000 per employee, per quarter in calculating the credit, and employers qualify for the credit if their gross receipts for a calendar quarter are less than 80 percent of the gross receipts of such employer for the same calendar quarter in calendar year 2019.

Also, for employers with greater than 500 full-time employees, qualified wages are wages paid to employees when they are not providing services due to either of the COVID-19-related circumstances. For eligible employers with 500 or fewer full-time employees, all employee wages qualify for the credit if the employer has experienced one of the COVID-19 related circumstances.

The provision also includes various other technical changes to the ERC.

California Impact
The FTB does not administer employment taxes. Wage deductions that were disallowed under federal law as a result of claiming the federal ERC are allowed as a deduction for California.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 208

Title
Consolidated Appropriations Act, 2021, Minimum Age for Distributions during Working Retirement
Federal Effective Date
12/27/2020
Federal Operative Date
Distributions made before, on, or after 12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1884
IRC Section
401
California Conforms
Yes
Relevant RTC Sections
17501, 24601
Summary of Federal Change
The provision drops this minimum age to 55 for certain multiemployer plans for individuals who were participants in the plan before 4/30/2013. To qualify for this grandfather rule, the trust must have been in existence as of 1/1/1970, and the plan must have received at least one IRS favorable determination letter before 12/31/2011, affirming the age 55 in-service distribution provision.
California Impact
Under RTC sections 17501 and 24601, California automatically conforms to the federal changes made to IRC section 401. As a result, the federal provision that reduces the minimum age for distributions during working retirement for distributions made before, on, or after 12/27/2020, automatically applies under California law.
Revenue impact
20/21 21/22 22/23 23/24
Baseline Baseline N/A N/A

Details of Public Law 116-260, section 209

Title
Consolidated Appropriations Act, 2021, Temporary Rule Preventing Partial Plan Termination
Federal Effective Date
12/27/2020
Federal Operative Date
For plan years that include the period beginning 3/13/2020 and ending 3/31/2021, if the number of active participants covered by the plan on 3/31/2021 is at least 80 percent of the number of active participants covered by the plan on 3/13/2020.
Background
Consolidated Appropriations Act, 2021, page 1885
IRC Section
Uncodified, affecting IRC sections 401, 411
California Conforms
Yes
Relevant RTC Sections
17501, 24601
Summary of Federal Change
As a condition of qualification, IRC section 411(d)(3) requires retirement plans to provide for 100 percent vesting upon termination or partial termination of a plan. The provision states that a plan will not be treated as having had a partial termination during any plan year which includes the period beginning 3/13/2020, and ending 3/31/2021, if the number of active participants in the plan covered on 3/31/2021, is at least 80 percent of the number on 3/13/2020.
California Impact
Under RTC sections 17501 and 24601, California automatically conforms to the federal changes made to IRC section 411. As a result, the federal provision that creates a temporary rule preventing partial plan termination, relating to minimum vesting standards of a qualified trust under IRC section 401(a), automatically applies under California law.
Revenue impact
20/21 21/22 22/23 23/24
Baseline Baseline N/A N/A

Details of Public Law 116-260, section 210

Title
Consolidated Appropriations Act, 2021, Temporary Allowance of Full Deduction for Business Meals
Federal Effective Date
12/27/2020
Federal Operative Date
Amounts paid or incurred after 12/31/2020 and before 1/1/2023
Background
Consolidated Appropriations Act, 2021, page 1885
IRC Section
274
California Conforms
No
Relevant RTC Sections
17201, 24443
Summary of Federal Change
The provision states that the 50 percent limitation does not apply to expenses for food or beverages provided by a restaurant that are paid or incurred after 12/31/2020, and before 1/1/2023.
California Impact

California conforms, under the PITL and the CTL, to the federal rules for the deductibility of fringe benefits under IRC section 274, as of the specified date of 1/1/2015, but does not conform to the federal repeal of the exception under federal law relating to the deduction disallowance for entertainment, amusement, or recreation that is directly related to the active conduct of a trade or business for amounts paid or incurred after 12/31/2017.

In addition, California does not conform to the temporary elimination of the 50 percent limitation on the deduction of expenses for food or beverages provided by a restaurant that are paid or incurred after 12/31/2020, and before 1/1/2023.

Revenue impact
20/21 21/22 22/23 23/24
N/A $ (60,000,000) $ (39,000,000) $ (13,000,000)

Details of Public Law 116-260, section 211

Title
Consolidated Appropriations Act, 2021, Temporary Special Rule for Determination of Earned Income
Federal Effective Date
12/27/2020
Federal Operative Date
First taxable year that begins in 2020
Background
Consolidated Appropriations Act, 2021, page 1885
IRC Section
Uncodified, affecting IRC sections 24, 32, 61, and 6213
California Conforms
No
Relevant RTC Sections
17052
Summary of Federal Change

For purposes of the child tax credit and the earned income tax credit (EITC), if the earned income for the first taxable year that begins in 2020 is less than the earned income of a taxpayer for the preceding taxable year, the taxpayer may elect to substitute the earned income of the preceding taxable year for the earned income for the first taxable year that begins in 2020. In the case of a joint return, the earned income of the taxpayer for the preceding taxable year is the sum of the earned income of each spouse for the preceding taxable year.

For purposes of this provision, the Internal Revenue Service shall treat the incorrect use of earned income on a return as a mathematical or clerical error. Also, except with regard to this provision, the substitution of earned income shall have no effect on gross income under the IRC.

California Impact

California does not conform to the federal child tax credit. The Young Child Tax Credit (YCTC) became available in California for the 2019 taxable year. It applies to taxpayers that qualify for the California EITC (CalEITC) and have a child under the age of 6 as of the end of the taxable year. The YCTC provides for a credit amount of up to $1,000.

For each taxable year beginning on or after 1/1/2015, California’s PITL conforms to the federal EITC as in effect under federal law for that taxable year, with modifications. California does not conform to the provision to substitute the earned income for the preceding year for the earned income of the first taxable year that begins during 2020. Therefore, for purposes of the CalEITC, 2020 earned income must be used for the 2020 taxable year.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 212

Title
Consolidated Appropriations Act, 2021, Certain Charitable Contributions Deductible by Non-Itemizers
Federal Effective Date
12/27/2020
Federal Operative Date
Taxable years beginning after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1886
IRC Section
62, 63, 170, 6662, 6751
California Conforms
No
Relevant RTC Sections
17024.5, 17072, 17201
Summary of Federal Change
The provision allows an above the line deduction up to $300 ($600 for married filing joint returns) for charitable cash contributions to specified charitable organizations in 2021 to an individual that does not itemize their deductions. Under this provision, a 50 percent penalty applies to tax underpayments attributable to any overstated cash contribution.
California Impact
California conforms to the definition of adjusted gross income under IRC section 62, as of the specified date of 1/1/2015, with modifications, but does not conform to the allowance of this partial above the line deduction for charitable contributions.
Revenue impact
20/21 21/22 22/23 23/24
N/A $ (110,000,000) $ 0 $ 0

Details of Public Law 116-260, section 213

Title
Consolidated Appropriations Act, 2021, Modification of Limitations on Charitable Contributions
Federal Effective Date
12/27/2020
Federal Operative Date
Contributions made after 12/31/2020
Background
Consolidated Appropriations Act, 2021, page 1887
IRC Section
Uncodified, affecting Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2205, and IRC section 170.
California Conforms
No
Relevant RTC Sections
17201, 17275.2, 17275.3, 17275.5, 24357 – 24359.1
Summary of Federal Change
The provision increases the limitations on deductions for charitable contributions by individuals who itemize, as well as corporations. For individuals, the 50 percent of adjusted gross income limitation is suspended for 2020 and 2021. For corporations, the 10 percent limitation is increased to 25 percent of taxable income. This provision also increases the limitation on deductions for contributions of food inventory from 15 percent to 25 percent. Contributions that exceed the applicable percentages may be carried forward for up to five years. A qualified contribution means a charitable contribution made in cash during the 2020 and 2021 calendar years to which the taxpayer has elected to apply this section.
California Impact

Under the PITL, California generally conforms to the federal charitable contribution rules under IRC section 170 as of the specified date of 1/1/2015, and as a result, does not conform to the provisions related to increased limitations and carryovers for charitable contributions that were made during 2020 and 2021.

Under the CTL, California does not conform to IRC section 170, but instead has standalone law that is generally similar to federal law allowing corporations a deduction for charitable contributions. There are no similar provisions for the increased charitable contribution limitations and carryovers for contributions made during 2020 and 2021.

Revenue impact
20/21 21/22 22/23 23/24
N/A $ (270,000,000) $ 140,000,000 $ 55,000,000

Details of Public Law 116-260, section 214

Title
Consolidated Appropriations Act, 2021, Temporary Special Rules for Health and Dependent Care Flexible Spending Arrangements
Federal Effective Date
12/27/2020
Federal Operative Date
For Health flexible spending arrangement (FSA) and dependent care FSA plan years 2020 and 2021
Background
Consolidated Appropriations Act, 2021, page 1887
IRC Section
Uncodified, affecting IRC sections 21, 106, 125, and 126
California Conforms
No
Relevant RTC Sections
17131
Summary of Federal Change

The provision expands the carryover period of any unused funds in health and dependent care FSA plans for the 2020 year to plans ending in 2021, and for the 2021 year to plans ending in 2022. For plans that include a grace period, the provision permits an extension of the grace period for plan years ending in 2020 and 2021 to 12 months after the end of such plan year for any unused benefits and contributions to health FSAs and dependent care FSAs.

The provision also allows an employee who ceases to participate in an FSA during the plan years 2020 or 2021 to continue to receive reimbursements from unused benefits or contributions through the end of the plan year, including any extended grace period.

A temporary rule is added to extend the maximum age of eligible dependents from age 13 to age 14 for purposes of determining eligible dependent care FSA expenses. The rule applies to a plan year for which open enrollment ended before 1/31/2020, including any unused amounts that may be available in the following plan year due to a rollover or grace period.

In addition, the provision temporarily allows health FSAs and dependent care FSAs to allow participants to make prospective mid-year election changes for plan years ending in 2021 for any reason, and includes a special carry forward rule for dependent care FSAs where the dependent aged out during the 2020 calendar year.

California Impact
California conforms to IRC section 125, relating cafeteria plans, in RTC section 17131 as of the specified date of 1/1/2015, with modifications. California allows an employer’s contributions to, and benefits derived from, a plan that allows employees to choose from a menu of benefits consisting of cash and “qualified benefits” are excluded from the employee’s gross income. California has not conformed to the federal temporary special rules for health FSAs and dependent care FSAs.
Revenue impact
20/21 21/22 22/23 23/24
N/A $ 1,800,000 $ 700,000 $ 0

Details of Public Law 116-260, section 302

Title
Consolidated Appropriations Act, 2021, Special Disaster-Related Rules for Use of Retirement Funds
Federal Effective Date
12/27/2020
Federal Operative Date
Various, see Summary of Federal Change
Background
Consolidated Appropriations Act, 2021, page 1889
IRC Section
Uncodified, affecting IRC sections 72, 402, 403, 408, 414, 457, 3405
California Conforms
Partially
Relevant RTC Sections
17071, 17081, 17085, 17085.7, 17501, 24271, 24601
Summary of Federal Change

The provision waives the 10 percent early withdrawal tax for qualified disaster distributions (QDD) up to $100,000 from qualified retirement accounts. The distribution is taxed ratably over a three-year period, unless the taxpayer elects otherwise, and may be recontributed in three years, with repayments receiving direct rollover treatment.

A QDD is a distribution made to a qualified individual on or after the first day of the incident period of a qualified disaster and before 180 days after 12/27/2020. A qualified individual is defined as having a principal place of abode that is located in a qualified disaster area, and has suffered an economic loss as a result of the qualified disaster.

Disaster-Related Plan Loans

The provision also enables qualified individuals (as described above) to receive retirement plan loans in amounts up to $100,000 or 100 percent of the present value of the participant’s vested account balance. Repayment on these loans may be suspended for a period of up to one year (or up to 180 days after 12/27/2020, if longer) if repayment of the loan normally would be due during the period beginning on the first day of the disaster incident period and ending 180 days from the last day of such incident period. Interest on the plan loan must accrue during the suspension period.

Recontributions of Pre-Disaster Hardship Distributions for Principal Residence

Special recontribution rules allow recipients to recontribute hardship distributions initially taken to purchase or construct a principal residence in a qualified disaster area, but which were used for a different purpose due to the qualified disaster. The hardship distribution must have been received 180 days before and up to 30 days after the qualified disaster incident. The repayment period ends 180 days after 12/27/2020.

California Impact

California conforms to IRC section 72(t), additional tax on early distributions from qualified plans tax as applicable for federal purposes for the same taxable year using a rate of 2 1/2 percent in lieu of the federal tax rate. The COVID-19 early distributions would not be subject to a California early withdrawal tax if they are not subject to the federal additional tax on early distributions. (RTC section 17085(c))

RTC section 17081 conforms to federal law regarding loans from qualified plans as of the specified date of 1/1/2015, and generally allows a qualified employer plan to provide specified loans to a participant or a beneficiary that are not treated as taxable distributions from the plan if specified conditions are met.

RTC section 17085(f) was added to conform to Section 2202(b) of the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, relating to qualified retirement plan loans. However, California does not conform to the federal changes related to distributions from qualified retirement plan loans for disaster-related purposes under this Act.

Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 303

Title
Consolidated Appropriations Act, 2021, Employee Retention Credit for Employers Affected by Qualified Disasters
Federal Effective Date
12/27/2020
Federal Operative Date
For qualified wages beginning on the date on which a trade or business first became inoperable as a result of the disaster at the employee’s principal place of employment immediately before the disaster, and ending on the earlier of the date on which the trade or business resumed significant operations at the employee’s principal place of employment, or 150 days after the last day of the disaster incident period.
Background
Consolidated Appropriations Act, 2021, page 1894
IRC Section
Uncodified, affecting IRC Subtitle A (commencing with section 1) and section 38
California Conforms
No
Relevant RTC Sections
N/A
Summary of Federal Change

The provision allows a credit of up to $2,400 per employee to employers impacted by qualified disasters if the employer:

  • Had an active trade or business at the time of the disaster, located in a qualified disaster zone and rendered inoperable as a result of the disaster, and
  • Continued to pay wages to eligible employees that were employed at the location immediately before the disaster.

Employers must claim the general business credit for the taxable year qualified wages were paid to the employee. The credit equals 40 percent of wages, with a maximum of $6,000 per employee, paid to or incurred for an eligible employee:

  • Beginning on the date on which the trade or business first became inoperable as a result of the disaster at the employee’s principal place of employment immediately before the disaster, and
  • Ending on the earlier of:
    • The date on which the trade or business resumed significant operations at the employee’s principal place of employment, or
    • 150 days after the last day of the disaster incident period.

Employers cannot claim the qualified disaster credit for wages for which certain other credits are claimed, including the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), employee retention credit.

Non-governmental tax-exempt organizations, with the exception of certain public colleges, universities and hospitals, may claim the credit against Social Security tax.

Employers may elect for these provisions not to apply. In addition, the provision requires the Secretary of Treasury to issue guidance providing that if an election is made, payroll costs paid or incurred during the covered period can be considered qualified wages to the extent that a covered loan of the eligible employer is not forgiven by reason of a decision under section 7A(g) of the Small Business Act.

Also, employers are not allowed to deduct from income the portion of qualified wages that equal the employee retention credit amount.

This provision also amends the Paycheck Protection Program (PPP) to exclude qualified wages taken into account in determining the Employee Retention Credit (ERC) for Employers Affected by Qualified Disasters or Payroll Tax Credit for Certain Tax-Exempt Organizations from payroll costs.

California Impact
California does not conform to the new federal employee retention credit or to existing federal general business credit provisions. Wage deductions that were disallowed under federal law as a result of claiming the federal ERC are allowed as a deduction for California.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 304

Title
Consolidated Appropriations Act, 2021, Other Disaster-Related Tax Relief Provisions
Federal Effective Date
12/27/2020
Federal Operative Date

Contributions paid beginning on 1/1/2020 and ending 60 days after 12/27/2020

Personal casualty losses arising in a qualified disaster area, on or after the first day of the incident period of a related qualified disaster

Background
Consolidated Appropriations Act, 2021, page 1898
IRC Section
Uncodified, affecting Coronavirus Aid, Relief, and Economic Security Act (CARES Act), PL 116-136, section 2205, and IRC sections 165 and 170.
California Conforms
No
Relevant RTC Sections
17201, 17204, 24357 – 24359.1
Summary of Federal Change

Charitable Contributions

The provision establishes a new category of qualified disaster relief contributions, for which corporations are allowed a deduction up to 100 percent of taxable income. A qualified disaster relief contribution is defined as any qualified contribution (per section 2205(a)(3) of the CARES Act) if the contribution is paid during the period beginning on 1/1/2020, and ending on the date that is 60 days after 12/27/2020, and is made for relief efforts in one or more qualified disaster areas.

The provision also requires the taxpayer to obtain a contemporaneous written acknowledgment from the organization receiving the donation that the contribution was or is to be used for disaster relief efforts. An election is also required to be made to apply the provision to the contribution.

The provision is applied first to qualified contributions (under the CARES Act section 2205(a)(2)(B)) without regard to qualified disaster relief contributions and then separately to the qualified disaster relief contributions.

Personal Casualty Losses

The provision adds special rules for individuals who have a net disaster loss for any taxable year. Net disaster loss is defined as the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in IRC section 165(h)(3)(A)). Qualified disaster-related personal casualty losses are defined as personal casualty losses that arise in a qualified disaster area, on or after the first day of the incident period of a related qualified disaster.

For qualified disaster-related personal casualty losses, the per-casualty floor is increased from $100 to $500. Additionally, the 10 percent adjusted gross income (AGI) limitation does not apply to the net disaster loss. The 10 percent AGI limitation applies only to the excess of the personal casualty losses over personal casualty gains reduced by the net disaster loss amount.

The provision treats the net disaster loss as an addition to the standard deduction of the individual, rather than as an itemized deduction. For alternative minimum tax purposes, the disallowance of the standard deduction does not apply to the increased amount attributable to the net disaster loss.

California Impact

Charitable Contributions

Under the CTL, California does not conform to IRC section 170, but instead has standalone law that is generally similar to federal law allowing corporations a deduction for charitable contributions. California does not conform to the federal increased 100 percent of taxable income deduction for charitable contributions.

Personal Casualty Losses

Under the PITL, California generally conforms to the federal charitable contribution rules under IRC section 165 as of the specified date of 1/1/2015, and as a result, does not conform to the federal special rules for qualified disaster-related personal casualty losses arising in a qualified disaster area.

Revenue impact
20/21 21/22 22/23 23/24
N/A $ (320,000,000) $ (46,000,000) $ (21,000,000)

Details of Public Law 116-260, section 305

Title
Consolidated Appropriations Act, 2021, Low-Income Housing Tax Credit
Federal Effective Date
12/27/2020
Federal Operative Date
Calendar years 2021 and 2022, and qualified disaster areas beginning on 1/1/2020, and ending on the date which is 60 days after 12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1899
IRC Section
Uncodified, affecting IRC section 42
California Conforms
No
Relevant RTC Sections
17057.5, 17058, 23610.4, 23610.5
Summary of Federal Change

The provision increases, for calendar years 2021 and 2022, the credit allocation ceiling for buildings located in any qualified disaster zone, defined as that portion of any qualified disaster area which was determined by the President during the period beginning on 1/1/2020, and ending on the date which is 60 days after 12/27/2020.

For 2021, the increase is equal to the “applicable dollar limitation,” which is the lesser of $3.50 multiplied by the population residing in a qualified disaster zone, or 65 percent of the state’s overall credit allocation authority for calendar year 2020. For 2022, the increase is equal to the “applicable dollar limitation” reduced by the amount of any increase in the credit allocation authority from 2021. Buildings impacted by this provision will also be granted a one-year extension of the placed in service deadline and the 10 percent test.

California Impact
California generally conforms, under the PITL and the CTL, to the low-income housing credit under IRC section 42 as of the specified date of 1/1/2015, with modifications. California does not conform to the federal changes that increase the credit allocation authority for buildings located in any qualified disaster zone.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 102

Title
Consolidated Appropriations Act, 2021, Disclosures to Identify Tax Receivables Not Eligible for Collection Pursuant to Qualified Tax Collection Contracts
Federal Effective Date
12/27/2020
Federal Operative Date
Disclosures made on or after 12/27/2020
Background
Consolidated Appropriations Act, 2021, page 1902
IRC Section
6103, 7213
California Conforms
No
Relevant RTC Sections
19542-19547, 19549, 19551-19555, 19559, 19561, 19562, 19565
Summary of Federal Change
Makes technical amendments to IRC section 6103, relating to disclosure of returns and return information.
California Impact
California has standalone provisions related to disclosure of confidential information.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A

Details of Public Law 116-260, section 103

Title
Consolidated Appropriations Act, 2021, Modification of Certain Protections for Taxpayer Return Information
Federal Effective Date
12/27/2020
Federal Operative Date
Disclosures made after 12/19/2019, the date of the enactment of the FUTURE Act (Public Law 116–91).
Background
Consolidated Appropriations Act, 2021, page 1903
IRC Section
6103
California Conforms
No
Relevant RTC Sections
19542-19547, 19549, 19551-19555, 19559, 19561, 19562, 19565
Summary of Federal Change
Makes technical amendments to IRC section 6103, relating to disclosure of returns and return information.
California Impact
California has standalone provisions related to disclosure of confidential information.
Revenue impact
20/21 21/22 22/23 23/24
N/A N/A N/A N/A