Tax News March 2026

February Tax News Flash and Newsroom Posts

February 12, 2026 — Form instructions for taxable year 2025 relating to credit for prior year alternative minimum tax or minimum tax credit

February 25, 2026 — California has stopped more than $6 billion in Fraud in the last 8 years

2026 Tax Season Readiness

As tax season ramps up, ensure you and your clients are prepared and have timely submitted Power of Attorney (POA) declarations and Tax Information Authorization (TIA) forms. For faster processing, use MyFTB, which offers 24/7 access to self-service options, including online TIA renewals, and detailed tax information once authorized. TIA relationships last 13 months; renewals open 90 days before expiration and close five days prior. POA relationships last six years and new declarations must be submitted to continue the representation.

We've added a full playlist of How-to Videos to help taxpayers and tax professionals manage POA and TIA relationships easily. Find them on FTB's YouTube channel and on the Help with POA and Help with TIA pages.

There are several options available for submitting a POA/TIA. Below are the methods you can use to submit a POA/TIA without a signature.

POA Submission Options (No Signature Required):

• MyFTB (Taxpayer): Submit electronically; no form or signature required.

• MyFTB (Tax Professional): Submit through your account; taxpayer approves online, eliminating physical signatures and mailing.

TIA Submission Options (No Signature Required):

• MyFTB (Tax Professional): Submit through your account; taxpayer approves online, eliminating physical signatures and mailing.

For additional information, visit Power of Attorney and Tax Information Authorization.

2025 Tax Law Changes

Conformity Act of 2025

Senate Bill (SB) 711, enacted on October 1, 2025, changes California's specified conformity date to the Internal Revenue Code (IRC) from January 1, 2015, to January 1, 2025, for personal income tax and corporate tax purposes.

SB 711 does not include federal tax law enacted after January 1, 2025, such as the "One Big Beautiful Bill Act" (Public Law 119-21).

Under the new specified date, there are continuing differences between California and federal law. When California law conforms to federal tax law changes, it does not always adopt all the changes made at the federal level. Many of the Revenue and Taxation Code amendments are non-conforming and result in no changes to forms or instructions. Additionally, SB 711 identifies provisions that California law previously did not conform to as of January 1, 2015, specified date and is now conforming to as of January 1, 2025.

Alimony — California law has until now conformed to federal law related to alimony and separate maintenance payments as it read on January 1, 2015. Specifically, California did not follow the federal repeal of IRC Sections 71, 215, and 682, effective for taxable years after 2018. California is conforming with modifications to the federal repeal of IRC Sections 71, 215, and 682. Specifically, alimony and separate maintenance payments made for divorce or separation agreements executed after December 31, 2025, or a previously executed agreement modified after December 31, 2025, to expressly provide that the amendments made by SB 711 apply to such modification, are not included as income for the recipient spouse and not deductible by the payor spouse beginning in taxable year 2026.

For this type of alimony and separate maintenance payments, California law is the same as federal law and no adjustment is needed.

Organ Donor Election — For taxable years beginning on or after January 1, 2025, California law requires FTB to add checkboxes on resident income tax returns for Organ Donor Election. These checkboxes allow individuals to provide written consent for Donate Life California to enroll the individual in the Donate Life California Organ and Tissue Donor Registry. The law also authorizes FTB to share the individual's registration information with Donate Life California for purposes of administering the donor registry. Individuals can make the election to register by checking the applicable box under the Organ Donor Election section on Side 5 of Form 540. For more information, follow the specific line instructions for Form 540, Organ Donor Election Consent Information section.

Military Retirement Exclusion — For taxable years beginning on or after January 1, 2025, and before January 1, 2030, California law allows an exclusion from gross income for a qualified taxpayer that received retirement pay from the federal government for service in the uniformed services or annuity payments pursuant to a United States Department of Defense Survivor Benefit Plan during the taxable year, not to exceed $20,000. For more information, go to Revenue & Taxation Code (R&TC) Sections 17132.9 and 17132.10, and get FTB Pub.1032.

Behavioral Health Services Act — For taxable years beginning on or after January 1, 2025, the Mental Health Services Act has been renamed to the Behavioral Health Services Act. Therefore, references to the Mental Health Services Tax have been renamed to Behavioral Health Services Tax. For more information, visit specific line instructions for Form 540, line 62.

Voluntary Contribution — You may contribute to the following new funds:

1. California Pediatric Cancer Research Voluntary Tax Contribution Fund
2. Parkinson's Disease Research Voluntary Tax Contribution Fund

Program 4.0 California Motion Picture and Television Production Credit — For taxable years beginning on or after January 1, 2025, California Revenue and Taxation Code (R&TC) Sections 17053.98.1 and 23698.1 allow a new motion picture credit, program 4.0, against tax. The credit is certified and allocated by the California Film Commission (CFC).

This credit can reduce tax below tentative minimum tax (TMT) for individuals and corporations.

In addition, R&TC Sections 17053.98.1 and 23698.1 allow a qualified taxpayer to make a one-time irrevocable election to receive a limited refundable tax credit for program 4.0 credit that exceeds the qualified taxpayer's tax liability for the taxable year.

The election must be made on FTB 3541, California Motion Picture and Television Production Credit, in the first taxable year the certificate is issued and attached to a timely filed, original income tax return. Taxpayers who purchase a tax credit are not permitted to elect a refund. For more information, visit California Film Commission.

Wildfire Disaster Settlement Exclusion — For taxable years beginning on or after January 1, 2021, and before January 1, 2030, California law allows a qualified taxpayer an exclusion from gross income for any qualified amount received from a settlement entity in connection with a qualified wildfire disaster in California. If a qualified taxpayer included income for a qualified amount received from a settlement entity in a prior taxable year, the taxpayer can file an amended return for that year within the applicable statute of limitations.

For more information, review R&TC 17138.7 and 24309.2.

Chiquita Canyon Elevated Temperature Landfill Event Exclusion — For taxable years beginning on or after January 1, 2024, and before January 1, 2029, California law allows an exclusion from gross income for any Chiquita Canyon elevated temperature landfill event payment amount received by a taxpayer. If a taxpayer included income for a Chiquita Canyon elevated temperature landfill event payment amount received in a prior taxable year, the taxpayer can file an amended return for that year within the applicable statute of limitations.

For more information, review R&TC 17157.5 and 24309.9.

Direct Deposit for CalABLE Account — If you have an eligible disability, you may contribute your refund to a tax-advantaged California Achieving a Better Life Experience (CalABLE) account while protecting eligibility for public benefits. Please visit calable.ca.gov for instructions.

Single Sales Factor Apportionment for Financial Institutions — For taxable years beginning on or after January 1, 2025, California law removes savings and loan and banking or financial business activities from the definition of qualified business activities for purposes of apportionment.

For more information, review R&TC Section 25128 and get Schedule R, Apportionment and Allocation of Income.

Reporting Requirements — Taxpayers may need to file form FTB 4197, Information on Tax Expenditure Items, with the tax return to report tax expenditure items as part of the FTB's annual reporting requirements under R&TC Section 41.

To determine if you have an R&TC Section 41 reporting requirement, review the R&TC Section 41 Reporting Requirements section or get form FTB 4197.

Federal Tax Changes Under One Big Beautiful Bill Act (OBBBA) — In general, California R&TC does not conform to the OBBBA. For adjustments due to the OBBBA, review Form 540 Personal Income Tax booklet and Form 100, Corporation Income Tax booklet.

Summary of Federal Income Tax Changes Report

Pursuant to Revenue and Taxation Code (R&TC) Section 19522, the Franchise Tax Board (FTB) is legislatively mandated to submit a report to the Legislature for all changes made to the Internal Revenue Code enacted into law in the prior year.

FTB has completed the Summary of Federal Income Tax Changes (SOFITC) report for Public Laws 119-21, 119-29, and 119-39.

We are currently analyzing Public Law 119-64, signed on December 26, 2025. This Public Law will be published by the statutory due date.

One Big Beautiful Bill Act (OBBBA) (Rep. Arrington, Jodey C)

H.R. 1 was signed July 4, 2025, and became Public Law No.119-21.

The OBBBA extends several Tax Cut and Job Act provisions and significantly modifies clean energy policies and tax credits enacted through the Inflation Reduction Act.

Filing Relief for Natural Disasters Act (Rep. Kustoff, David)

H.R. 517 was signed July 24, 2025, and became Public Law No.119-29.

The act authorizes the IRS to postpone federal tax deadlines for taxpayers affected by a qualified state-declared disaster, upon written request by the state governor.

Internal Revenue Service Math and Taxpayer Help Act (Rep. Feenstra, Randy)

H.R. 998 was signed November 25, 2025, and became Public Law No.119-39.

The act requires specific information on a taxpayer notice related to a math or clerical error.

Disaster Related Extension of Deadlines Act (Rep. Murphy, Gregory)

H.R. 1491 was signed December 26, 2025, and became Public Law No.119-64.

The act extends the statute of limitations to claim a refund or credit and the statute of limitations to mail a notice and demand for tax when the IRS extends a filing deadline due to a disaster.

To review the report, go to Summary of Federal Income Tax Changes.

Form Instructions for Taxable Year 2025 Relating to Credit for Prior Year Alternative Minimum Tax or Minimum Tax Credit

FTB issued a Tax News Flash on February 12, 2026, and a Public Service Bulletin on February 13, 2026, informing taxpayers and practitioners that FTB had updated its 2025 Schedule P (100) Instructions, Schedule P (100W) Instructions, and Form 3510 Instructions.

Should taxpayers contend that they are entitled to a refund for a prior tax year, taxpayers may file a claim for refund within the applicable statute of limitations.

California Competes Tax Credit (CCTC)

For the last application period of Fiscal Year 2025/2026, the Governor's Office of Business and Economic Development (GO-Biz) will accept applications for the CCTC starting March 2, 2026, through March 16, 2026.

This application period has $306.6 million available for allocation, plus any remaining unallocated amounts from the previous applications periods.

Applications for the credit will be accepted at California Competes.

For more information, go to California Competes Tax Credit.

California Add-back of Federal Pass-Through Entity (PTE) Elective Tax Deduction

California Assembly Bill 150 established the California PTE elective tax and credit for taxable years beginning on or after January 1, 2021, and before January 1, 2026. Eligible partnerships, Limited Liability Companies (LLCs), and S corporations have been utilizing the PTE elective tax and credit to alleviate the impact of the federal limitation on state and local tax (SALT) deductions for their individual owners. California Senate Bill 132 extended the PTE elective tax and credit for taxable years beginning on or after January 1, 2026, and before January 1, 2031. As the 2026 filing season begins, FTB aims to provide additional information on the proper reporting of the PTE elective tax and related deduction. We thank the tax professional community for their continued cooperation and dedication to improving state income tax compliance.

Federal

Internal Revenue Service Notice 2020-75 explains that the PTE elective tax is deductible as state income taxes paid by a qualified entity when computing federal taxable income or loss from its trade or business. This deduction for state taxes is passed through to the qualified entity's qualified taxpayers (i.e. partner, member, or shareholder) as a decrease in their pro rata or distributive share of qualified entity's income on their federal Schedule K-1. Additionally, for state tax purposes, the qualified entity's qualified taxpayers receive a credit relating to the PTE elective taxes paid by the qualified entity.

For more information, refer to IRS Notice 2020-75.

California

California does not allow a deduction for state income taxes paid by the qualified entity. If the qualified entity deducts the PTE elective tax for federal purposes, the amount of the PTE elective tax that was deducted must be added back for California purposes in calculating the qualified entity's California net income. To report a qualified entity's California net income correctly, the qualified entity should make a positive adjustment under the California Adjustments column, column (c) of the adjustments section on Schedule K/K-1 of Form 565, 568, and 100S, adding back the federal PTE elective tax deduction to the qualified entity's California net income. The qualified entity should also report the PTE elective tax as a nondeductible and noncapitalizable expense of the qualified entity on the CA Schedules K/K-1. For California tax purposes, S corporations must add back the PTE elective tax deduction on Form 100S, Side 1, Line 2 to ensure the 1.5% tax is computed correctly.

For more information, go to Pass-through entity (PTE) elective tax.

New Online Service — Verify Submitted Tax Return

We continue to do our best to provide new self-services and enhancements for taxpayers, the tax practitioner community, and small business owners of California to save you time and improve your ability to work with FTB.

Taxpayers and tax practitioners can now respond online with this new tax fraud prevention letter to verify a submitted tax return, with or without a MyFTB account.

For more information about fraud, go to Tax Fraud.

New Nonresident Withholding for Property Managers YouTube Available

A YouTube video for Nonresident Withholding for Property Managers is now available.

The video reviews the following information:

• Definitions
• California Nonresident Withholding Requirements
• Income Subject to Withholding
• Withholding Exceptions
• FTB 1018, Quick Reference Guide California Nonwage Withholding Forms
• Withholding Liability & Penalties
• Resources

Resources for Small Business Owners

In an effort to provide all the available information possible, FTB, along with other California state agencies, have informative websites and publications to assist small business owners.

Informative Websites:

• FTB — We have a Business section that provides useful links and filing information for the different forms of business ownership. It also includes information on Doing Business in California and important due dates. There is a Business help webpage that includes Revivor information if a business is suspended, and links for information on how to dissolve or cancel a business entity. Convenient online services such as Web Pay can also be found there.
• The California Office of the Small Business Advocate (CalOSBA) — CalOSBA offers a comprehensive website that features a business learning center, quick start guides, and links to financial assistance. If you or your client is in need of permit assistance, CalGold is a helpful website that can point you in the right direction of what permits and licenses you may need for your particular business and your particular location.
• California Secretary of State (SOS) — This website has a Business section that allows you to search for and access all public records for an entity, to find forms to start or dissolve/cancel a business entity, and even file statements of information online.
• Small Business Assistance Center — The Small Business Assistance Center is another great resource that is located at California Tax Service Center. This website is sponsored by the state of California and contains useful information for all aspects of your business.

Education and Outreach Events:

The following two event calendars can be used to find upcoming Small Business Education and Outreach events near you.

• FTB Event Calendar — On our website, an event calendar shows upcoming events that are part of our education and outreach efforts. Upcoming small business seminars are listed here.
• CDTFA Event Calendar — This is a comprehensive calendar that lists all upcoming events that are sponsored by the CDTFA. They include Small Business Seminars, New Business Orientation, Basic Sales and Use Tax Classes, Nonprofit Seminars, and more!

Publications:

• FTB 1123, Common Forms of Ownership — This publication is a resource of the filing requirements and general information about the different forms of business ownership. As a business owner, one of your most important decisions is which form of business ownership will best fit your business needs. FTB 1123 gives you the information you need to make an informed decision.
• FTB 984, Common Business Expenses — In this publication, the most common business expenses are discussed.
• FTB 3556, General LLC Information — This is a publication that specifically deals with Limited Liability Companies (LLCs) and how they are considered hybrid business entities that takes characteristics from corporations and partnerships.
• FTB 1060, Guide for Corporations Starting Business in California — This is a guide to help understand the filing requirements of corporations.

Internal Revenue Service (IRS) Updates

We partnered with the IRS to provide monthly IRS articles to assist our tax professional and small business communities, and we are excited to share this information; however, questions about the content should be directed to the IRS.

Treasury, IRS issue guidance on special depreciation allowance for qualified production property, announce upcoming proposed regulations under the One, Big, Beautiful Bill

IR-2026-25, Feb. 20, 2026 — The Department of the Treasury and the IRS provided interim guidance for taxpayers regarding the special depreciation allowance for qualified production property enacted under the One, Big, Beautiful Bill.

Treasury, IRS provide guidance for certain energy tax credits regarding material assistance provided by prohibited foreign entities under the One, Big, Beautiful Bill

IR-2026-23, Feb. 12, 2026 — The Department of the Treasury and the IRS issued a notice providing guidance for determining whether electricity-producing qualified facilities, energy storage technologies, or eligible components are receiving material assistance from a prohibited foreign entity (PFE) and would be ineligible for certain energy tax credits.

IRS announces next expansion of Tax Pro Account to support tax professional businesses

IR-2026-22, Feb. 9, 2026 — The IRS announced a new expansion of Tax Pro Account, introducing business-level digital capabilities for tax professionals who work in tax-preparation companies, accounting firms, or other organizations.

Create an IRS Individual Online Account today for security and convenience

IR-2026-21, Feb. 3, 2026 — The IRS encourages all taxpayers to create an IRS Individual Online Account to access their tax account information securely online and to help protect against identity theft and fraud.

Treasury, IRS issue proposed regulations on the clean fuel production credit under the One, Big, Beautiful Bill

IR-2026-20, Feb. 3, 2026 — The Department of the Treasury and the IRS issued proposed regulations for domestic producers of clean transportation fuel to determine their eligibility for and calculate the clean fuel production credit under the One, Big, Beautiful Bill.

Ask the Advocate

Account Transcript Requests Raised at Taxpayers’ Bill of Rights Hearing

During the recent annual Taxpayer Bill of Rights (TBOR) hearing, members of the tax community raised concerns regarding the Franchise Tax Board's (FTB) lack of a consolidated account transcript comparable to the Internal Revenue Service transcripts. I appreciate this testimony and recognize the challenges this service gap presents for taxpayers and practitioners.

Clear and accessible account information is essential for efficient tax administration, and the testimony reflects a shared goal: make it easier for taxpayers and professionals to understand and resolve tax account matters.

FTB Current Account Information Options

FTB does not currently provide a single, standardized account transcript that consolidates filing history, payments, adjustments, and balances in one document. However, several tools are available to assist taxpayers and practitioners.

Through MyFTB, tax professionals with a valid Power of Attorney (POA) and full online access granted by their client may review client tax return data for the tax year(s) authorized, which generally can include the current year and up to six years prior. They may also view balances due, payments, and selected account activity. While this information is helpful and accessible, it is not presented in a consolidated, downloadable transcript format.

Additional account details may be obtained through notices, written correspondence, or direct contact with FTB. Although these methods may require additional coordination, they provide meaningful insight into taxpayer account activity.

MyFTB Personal Income Tax - Taxable Year Summary

For Personal Income Tax (PIT) clients, MyFTB provides a printable Taxable Year Summary for each available year, a useful tool when reviewing year-specific account activity.

Key Notes:

1. Each year must be requested independently.
2. The summary is generated in real time.
3. It can be requested for any year displayed in MyFTB.
4. It includes each payment applied, reflected in both:
   • the Taxable Year Information table, and
   • the Payment Summary table.

Business Entity — Taxable Year Summary

Business Entities (BE) and their authorized representatives may request a Taxable Year Summary within MyFTB or MyFTB's Live Chat, or by calling our call centers. Requests received through our Call Center or those submitted through MyFTB are generally processed within 30 days and are sent by US mail or fax.

Key Notes:

1. Plan ahead as turnaround time is 30 days.
2. Request within MyFTB by following these steps:
   • Navigate to the BE overview home page, click "Account";
   • Select "Account Summary" from the drop-down menu;
   • Select "Account Period";
   • The "Account Period Summary" page provides a link to request a "Tax Year Summary"
   • Note: Each year must be requested independently through MyFTB.
3. Request via MyFTB Live Chat.
4. Phone requests, call FTB's Contact Centers.
   • If the account is in collections:
     • Corporations: 916-845-7033
     • LLC's/Partnerships: 916-845-7166
   • All other inquiries related to BE Taxable Year Summary:
     • 916-845-7057

Individual Status Letters

An Individual Status Letter (ISL) is a written verification of the status of a tax year account as of a certain date.  These letters can show lenders and other interested third parties that the individual has met their California income tax obligations. A request for an ISL can be submitted on the FTB website using an online application.

An ISL can be requested for the current tax year after the original due date of the return. FTB will process these requests after the return due date. An ISL can also be requested for the prior five tax years.

Since October 16, 2023, customers may request an ISL for the current year by logging into their MyFTB account.

Since January 16, 2024, an individual, the parent of a minor child, or an authorized representative, can request an ISL on FTB's website. This option does not require an individual to have a MyFTB account; they only need to follow the directions on the application and upload the required documents.

Summary

Although FTB does not provide a tax transcript service, tax practitioners may consider the following practical steps:

• Secure a valid POA and ask clients to grant full MyFTB online access.
• Review available return data based on tax year(s) authorized (generally current year plus up to six prior years).
• Download and retain the PIT Taxable Year Summary for each relevant year.
• Cross-reference the Taxable Year Information and Payment Summary tables to confirm applied payments.
• Maintain copies of key notices and correspondence to supplement MyFTB records.
• If necessary, contact FTB to clarify adjustments or payment applications not fully reflected online.

Access to comprehensive and user-friendly taxpayer account information supports the right to be informed under the Taxpayers' Bill of Rights. While the steps above may require more coordination than a single transcript would, they can help assemble a clear and reliable account history.

I appreciate the tax community's testimony and engagement in identifying practical improvements that enhance transparency, efficiency, and taxpayer service.