SB 1192: Personal Income Tax Law: Small Business Relief Act: elective tax.

Existing law, known as the Small Business Relief Act, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, authorizes a partnership or S corporation that meets certain other requirements to elect to pay an elective tax at a rate based on its net income, as specified, for the taxable year. Existing law repeals the act on December 1, 2026, or makes it inoperative and repeals the act on an earlier date if a specified federal law is repealed.

Existing law, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, allows a credit against the personal income tax of a taxpayer, other than a partnership, that is a partner, shareholder, or member of an entity that elects to pay the elective tax authorized by the act, in an amount equal to a specified percentage of the partners, shareholders, or members pro rata share or distributive share, as applicable, of income subject to the elective tax paid by the entity.

This bill would extend the provisions of the act, and the above-described credit against personal income tax, for taxable years beginning before January 1, 2028. The bill would make the provisions of the act inoperative and repeal them on an earlier date if a specified federal law is repealed or becomes inoperative.