Summary of Federal Income Tax Changes

This report includes an analysis of federal laws enacted prior to December 2020. Our analysis of the laws enacted in the month of December will be available in April 2021.

For questions about this report, contact FTB Legislative Services.

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
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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