Introduced this week, California AB 87 implements Governor Gavin Newsom’s proposed budget plan to allow taxpayers to again fully utilize business tax credits, like the R&D credit, and net operating loss deductions in 2022 (see our previous coverage on Governor Newsom’s proposed budget here). For tax years 2020 to 2022, AB 85 (enacted in 2020), limited the amount of business tax credits that can be claimed annually to $5 million and suspended use of net operating loss deductions for business taxpayers with income of $1 million or more (see our previous coverage on AB 85 here and here). On February 3rd, the Senate Budget and Fiscal Review Committee passed AB 87.
Further, AB 1400, which proposed universal single-payer health care coverage and a health care cost control system for state residents, failed to advance out of the state Assembly by the January 31 deadline for bills introduced in 2021 and has been declared dead for the year. Consequently, ACA 11, which would have funded the single-payer healthcare system by imposing a variety of new taxes and tax increases, is effectively dead this year too (see our previous coverage on ACA 11 here).