More than 5,000 bills were introduced during California's 2025-26 legislative session, with hundreds of fiscal measures shelved through Appropriations committees' suspense files before reaching the floor for consideration. The Legislature adjourned for the 2025-2026 season on August 31st. Many of the initiatives HdL has been watching did not progress, and just under one-third of all measures introduced have passed both the Assembly and Senate and await the governor's signature no later than September 30th.
Following the adoption of the State Budget on June 15th, the Legislature approved a significant expansion of California's sales and use tax base through the enactment of budget trailer bill SB 122. Beginning January 1, 2027, sales tax will generally apply to prewritten software regardless of delivery method, including Software as a Service, or SaaS.
As a reminder, “enrollment” means it has passed both houses and will be presented to the governor for action. HdL will publish a final legislative update in October to highlight which bills were ultimately signed into law.
The following includes HdL’s 2026 priority status updates on broad based and hot topic legislation to watch with a focus on bills related to sales and use tax, cannabis taxation and regulation, economic development, property taxation, and business license legislation.
FEATURED LEGISLATIVE PRIORITY
SB 1172 (HURTADO, D) BRADLEY-BURNS UNIFORM LOCAL SALES AND USE TAX LAW: TAX SHARING AGREEMENTS
SB 1172 would limit how much consultants can be paid in connection with local sales tax sharing agreements under the Bradley-Burns law, capping compensation at the lesser of 5% of shared revenues or $250,000. It also restricts payments so consultants cannot continue receiving compensation more than three years after an agreement takes effect or the associated project phase ends. The bill broadly defines tax sharing agreements as any arrangement involving the transfer or rebate of local sales tax revenue, while exempting local staff and unpaid advisors. These rules apply to agreements entered into on or after January 1, 2027, and are intended to promote fairness in local tax arrangements.
Status: Enrolled and presented to the Governor, 8/28/26.
LEGISLATION TO WATCH
BALLOT INITIATIVE 25-0006 (HOWARD JARVIS) LOCAL TAXPAYER PROTECTION ACT OR SAVE PROPOSITION 13 INITIATIVE
Proponents describe the measure as an effort to strengthen Proposition 13 taxpayer protections by restoring stricter voter approval requirements for certain local tax increases and limiting local authority to impose or continue certain higher real estate transfer taxes. If approved, the measure could reduce local fiscal flexibility and affect existing revenue sources currently available to some jurisdictions, including certain charter cities.
Status: Qualified for November 3, 2026 statewide ballot.
ACA 12 (WALLIS, R) ROAD USE CHARGES: VOTE AND VOTER APPROVAL REQUIREMENTS
The California Constitution requires any change in state statute that increases the tax liability of any taxpayer to be imposed by an act passed by two-thirds of the membership of each house of the Legislature and prohibits specified taxes on real property from being so imposed. For these purposes, the California Constitution defines a “tax” as any state levy, charge, or exaction, except as described in certain exceptions. The California Constitution describes one of those exceptions as a charge imposed for entrance to or use of state property, or the purchase, rental, or lease of state property, except charges governed by a specified provision of the California Constitution. This measure, on or after its effective date, would provide that the exception described above does not include a road usage charge, as described, thereby requiring the imposition of this type of charge to be subject to the two-thirds vote requirement.
Status: Failed to advance by 8/31/26, effectively dead.
ACA 13 (DEMAIO, R) PUBLIC FINANCE: BALANCED BUDGET ACCOUNTABILITY ACT OF 2015
This proposed constitutional amendment would require a two-thirds vote to approve any new or increased state-imposed fees or charges, including those adopted by state agencies. In addition, it would remove provisions allowing budget bills to take effect immediately upon enactment. The proposal includes provisions to expand the use of competitive bidding for government services and may limit future state employment costs.
Status: Failed to advance by 8/31/26, effectively dead.
ACA 14 (DEMAIO, R) TAXES AND FEES: VOTER THRESHOLDS
The California Constitution defines the power of the initiative as the power of the electors to propose statutes and amendments to the Constitution and to adopt or reject them. The California Constitution, before circulation of an initiative for signatures, requires a copy of the initiative to be submitted to the Attorney General to prepare a title and summary of the measure. This measure would require an initiative measure proposing to impose or increase a tax or a fee to meet specified requirements, including that the title of the initiative measure begin with the capitalized words “TAX INCREASE:” or “FEE INCREASE:”, and that the summary state whether the charge is a tax or a fee, the amount or rate of the charge, and the duration of the charge.
Status: Failed to advance by 8/31/26, effectively dead.
SCA 4 (ARCHULETA, R) PROPERTY TAXATION: VETERAN’S EXEMPTION
This constitutional amendment revises existing veterans’ and disabled veterans’ property tax exemptions by allowing properties receiving either exemption to also claim the homeowners’ exemption. It authorizes the Legislature to increase the veterans’ exemption up to the full value of the property and requires any increase in the homeowners’ exemption to be mirrored for the veterans’ exemption, subject to that limit. The measure removes current asset-based restrictions that prevent veterans, surviving spouses, or parents from receiving the veterans’ or deceased veterans’ exemption. It maintains existing eligibility criteria tied to service-connected disability or death. Overall, the amendment broadens access to property tax relief for veterans and their families.
Status: Failed to advance by 8/31/26, effectively dead.
BUSINESS LICENSE LEGISLATION
AB 1107 (FLORA, R) CIGARETTE AND TOBACCO PRODUCTS LICENSING ACT OF 2003: NITROUS OXIDE: LICENSURE
This bill would strengthen enforcement related to nitrous oxide by linking violations more directly to business licensing consequences. It requires courts to suspend a business license for up to one year for repeat violations involving unlawful distribution of nitrous oxide or failure to comply with required transaction recordkeeping. The bill also expands grounds for suspension or revocation under the Cigarette and Tobacco Products Licensing Act to include certain nitrous oxide–related offenses. It also prohibits the issuance of a tobacco retail license to applicants who have been convicted of specified crimes involving nitrous oxide distribution. Existing requirements, such as maintaining detailed transaction records and penalties for knowingly supplying nitrous oxide for unlawful use, remain in place but are reinforced through these licensing consequences. This measure aims to deter misuse by imposing stricter licensing restrictions and consequences on businesses involved in illegal nitrous oxide sales or distribution.
Status: Failed to advance by 8/31/26, effectively dead.
AB 2380 (PAPAN, D) PEST CONTROL: REGISTRATION FEES
Current law authorizes the board of supervisors of any county to establish reasonable fees for the registration of any person advertising, soliciting, or operating as a pest control business and limits the registration fee of certain pest control businesses to the amount necessary to cover the costs of registration, not to exceed $25. This bill would raise the maximum registration fee amount from $25 to $75.
Status: Presented to the Governor, 8/27/26.
AB 2619 (PAPAN, D) WATER RESOURCES: DATA CENTERS
Existing law authorizes the legislative body of an incorporated city and the county board of supervisors to license businesses carried on within their respective jurisdictions and to set license fees. This bill would require data center operators, prior to applying to a city or a county for an initial business license, equivalent instrument, or permit, to provide its water supplier, under penalty of perjury, an estimate of the expected water use, the anticipated source of water, and the data center’s projected water use volume for the maximum day, maximum month, and average year. It mandates similar reporting as part of the renewal process. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would define terms for purposes of these provisions.
Status: Presented to the Governor, 9/4/26.
SB 936 (BLAKESPEAR, D) NITROUS OXIDE: SALES
This bill would establish new restrictions on the sale and distribution of nitrous oxide products in California. It prohibits selling or distributing large-capacity nitrous oxide containers (over eight grams), containers designed for direct inhalation, flavored nitrous oxide products, and devices intended to facilitate inhalation. Violations would be treated as infractions with escalating fines, and repeat offenses could result in suspension of business, tobacco, cannabis, or seller permits for up to one year. The bill includes exemptions for legitimate uses, such as medical, dental, veterinary, industrial, automotive, and certain food-related applications involving small canisters. It also clarifies definitions and applies the restrictions to sales conducted in person or through online or electronic means, while allowing local governments to enact stricter rules. The measure aims to curb recreational misuse of nitrous oxide by limiting access to products and devices commonly associated with inhalation.
Status: Presented to the Governor, 9/2/26.
CANNABIS LEGISLATION
AB 2249 (IRWIN, D) CANNABIS: LABELS PACKAGING AND MANUFACTURING
The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities under the jurisdiction of the Department of Cannabis Control, including retail commercial cannabis activity. MAUCRSA prohibits a person engaged in commercial cannabis activity, whether licensed or unlicensed, from engaging in specified advertising or marketing activities, including publishing or disseminating advertising or marketing that is attractive to children. MAUCRSA also places specified requirements on the packaging and labeling of cannabis and cannabis products, including prohibiting packages and labels from being made to be attractive to children. This bill would prohibit the sale, distribution, or manufacture of cannabis, cannabis products, packaging, or labeling that are attractive to children. The bill would define the term “attractive to children” to include images of real or fictional humans and would create an exception to that prohibition in advertising or marketing. The bill would require the department, on or before July 1, 2027, to develop, adopt, and implement by regulation a standardized rubric for determining whether cannabis goods, including their packaging and labeling, are attractive to children, subject to certain requirements, including that the rubric identifies and describes prohibition design elements, as specified.
Status: Chaptered by Secretary of State, Chapter 164 Statutes of 2026.
AB 2697 (PELLERIN, D) CANNABIS: DRIVE-THROUGHS
Existing regulation prohibits the sale or delivery of cannabis or cannabis products through a pass-out window or a slide-out tray to the exterior of the licensed premises. This bill would authorize a local jurisdiction to allow licensed cannabis retailers to conduct drive-through sales if made through a fixed-pane security window with a security drawer that is part of a building located within the licensed premises. Local jurisdictions would retain the ability to allow or deny such sales at their discretion. The bill would exclude a licensee that conducts retail sales exclusively through delivery, or that does not maintain a premises open to the public for retail sales.
Status: Ordered to inactive file, 8/27/2026.
ECONOMIC DEVELOPMENT LEGISLATION
AB 72 (JACKSON, D) ELECTRIC VEHICLE OPPORTUNITY ZONE: COUNTY OF RIVERSIDE
The California Clean Energy Jobs Act expresses a goal of creating good-paying energy efficiency and clean energy jobs in California. Current law establishes in state government the Labor and Workforce Development Agency, under the supervision of the Secretary of Labor and Workforce Development, which consists of the Office of the Secretary of Labor and Workforce Development and the California Workforce Development Board, among others. Current law creates the position of Deputy Secretary for Climate within the agency, subject to appropriation by the Legislature, for the purpose of assisting in the oversight of California’s workforce transition to a sustainable and equitable carbon neutral economy. This bill would, upon appropriation by the Legislature, establish an Electric Vehicle Economic Opportunity Zone (EVEOZ) for the County of Riverside, administered by the Labor and Workforce Development Agency, for the purpose of creating programs to make electric vehicle manufacturing jobs and education more accessible to lower income communities. The bill would require the agency to collaborate with the County of Riverside in determining the geographical boundaries of the EVEOZ. By imposing additional duties on local officials, the bill would impose a state-mandated local program.
Status: Failed to advance by 8/31/26, effectively dead.
AB 685 (SOLACHE, D) LOS ANGELES AND VENTURA WILDFIRE SMALL BUSINESS RECOVERY ACT
The proposed bill seeks to establish the Los Angeles and Ventura Wildfire Small Business Recovery Act, aimed at aiding small businesses directly impacted by the January 2025 wildfires in Los Angeles and Ventura Counties. To support this initiative, the bill would appropriate $50,000,000 from the General Fund to create the Los Angeles and Ventura Wildfire Small Business Recovery Fund within the State Treasury. The Office of Small Business Advocate (OSBA) would be responsible for administering the fund and allocating the monies to both the Capital Investment Program (CIP) and the Small Business Technical Assistance Program (SB-TAP). Additionally, the bill mandates OSBA to establish a separate program to provide relief for employees of small businesses affected by the wildfires. The bill also requires the Governor’s Office of Business and Economic Development (Go-Biz) to submit a report to the Legislature detailing the allocation and expenditure of funds as per these provisions. The act is set to be repealed on January 1, 2031. Furthermore, the bill includes legislative findings and declarations highlighting the necessity of a special statute for Los Angeles and Ventura Counties.
Status: Presented to the Governor, 9/4/26.
LOCAL REVENUE AUTHORITY MEASURES
AB 1768 (BRYAN, D) TRANSACTIONS AND USE TAXES: COUNTIES OF CONTRA COSTA AND LOS ANGELES
This was an urgency statute signed by Governor Newsom that allows Los Angeles County’s Measure ER and Contra Costa County’s Measure B to exceed California’s 2% local transactions and use tax cap, subject to voter approval. Measure ER would authorize a temporary 0.5% countywide sales tax increase in Los Angeles County for five years to help offset Federal Medi-Cal funding reductions and support county hospitals, clinics, and related healthcare services. Measure B would authorize a temporary 0.625% countywide sales tax increase in Contra Costa County for five years to address federal funding reductions and support services such as health care, food assistance, and other general county services. Governor Newsom signed AB 1768 on June 1, 2026, thereby providing the legal authority for the measures to exceed the local transactions and use tax cap. The underlying county tax measures were presented to voters on June 2, 2026.
Status: Chaptered by Secretary of State, Chapter 11, Statutes of 2026. Los Angeles County Measure ER passed while Contra Costa County Measure B failed in the June 2, 2026 election.
AB 1919 (PELLERIN, D) SANTA CRUZ METROPOLITAN TRANSIT DISTRICT: TRANSACTIONS AND USE TAX: QUALIFIED VOTER INITIATIVE
This bill authorizes a transactions and use tax for the Santa Cruz Metropolitan Transit District to be proposed through a qualified voter initiative, in addition to the existing authority for the district board to propose a tax measure. The bill establishes procedures for placing these measures before Santa Cruz County voters and provides an additional pathway for considering local transportation funding.
Status: Signed into law as an urgency statute. Chaptered by Secretary of State, Chapter 107, Statutes of 2026.
AB 2484 (ALVAREZ, D) SAN DIEGO METROPOLITAN TRANSIT SYSTEM: TRANSACTIONS AND USE TAX: VOTER INITIATIVES
This bill would authorize a transactions and use tax of up to 0.5% for the San Diego Metropolitan Transit System to be imposed through a qualified voter initiative, in addition to the existing authority for the MTS board to propose the tax. The bill would also exclude the MTS tax from the statewide 2% combined transactions and use tax limitation, allowing the tax to be imposed even if the combined local rate would otherwise exceed the statutory cap.
Status: Presented to the Governor, 9/3/26.
SB 762 (ARREGUÍN, D) TRANSACTIONS AND USE TAXES: VARIOUS JURISDICTIONS
Existing law authorizes cities and counties, subject to certain limitations and approval requirements, to levy a transactions and use tax for general or specific purposes in accordance with the procedures and requirements set forth in the Transactions and Use Tax Law, including a requirement that the combined rate of all taxes that may be imposed in accordance with that law in the jurisdiction not exceed 2%. This bill authorizes thirteen specified jurisdictions to seek voter approval for local transactions and use taxes that may exceed the 2% cap described above. Authorized rates vary by jurisdiction from 0.25% to 1.0%, with the authority expiring if not approved by voters by December 31, 2030 or 2031.
Status: Chaptered by Secretary of State, Chapter 109, Statutes of 2026.
SB 1408 (ARREGUÍN, D) CONTRA COSTA TRANSPORTATION AUTHORITY: TRANSACTIONS AND USE TAX
This bill would authorize the Contra Costa Transportation Authority to seek voter approval for a transactions and use tax of up to 1% for transportation purposes. The measure would allow the authority’s tax rate to exceed the existing 2% countywide combined transactions and use tax limitation. Any tax imposed under the bill would not count toward that statutory limit.
Status: Presented to the Governor, 9/3/26.
LODGING LEGISLATION
AB 1953 (LOWENTHAL, D) SHORT-TERM RENTAL FACILITATOR
This bill would require both the Office of Emergency Services and the Office of Tourism to establish and administer public registration systems. Registered property owners would be required to offer short-term rentals during declared emergencies or designated special events, with regulations governing participation. The measure directs the Office of Tourism to define and publish qualifying special event periods in advance. It also authorizes registered properties to operate as short-term rentals during these periods without delay. The bill preempts local restrictions by prohibiting jurisdictions from banning or limiting these registered rentals during emergencies or designated events.
Status: Hearing canceled at the request of the author on 4/6/26, effectively dead.
AB 2364 (TA, D) SHORT-TERM RENTAL FACILITATOR ACT OF 2025
The Short-Term Rental Facilitator Act of 2025 imposes various requirements upon short-term rental facilitators, as defined. This bill would make non-substantive changes to the provision that names this Act.
Status: This placeholder bill failed to advance by 8/31/26, effectively dead.
PROPERTY TAX LEGISLATION
AB 1971 (BENNETT, D) PROPERTY TAX: EXCLUSION FROM REASSESSMENT: HOME HARDENING RETROFITTING IMPROVEMENTS
The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975–76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. As specified, “newly constructed” does not include the construction or reconstruction of seismic retrofitting components, as defined by the Legislature. This bill clarifies that certain fire-safety and seismic improvements are not considered “new construction” for property tax reassessment and expands this exclusion to include specified home-hardening retrofitting improvements, such as Class A roofs, multi-pane windows, vent screening, defensible space, and noncombustible materials for exterior features. It caps the exclusion so that reassessment does not omit more than $100,000 in home-hardening improvements. To qualify, property owners must obtain certification from approved home-hardening programs and notify the assessor before or shortly after project completion.
Status: Failed to advance by 8/31/26, effectively dead.
AB 2172 (GIPSON, D) PROPERTY TAXATION: COUNTY ASSESSMENT APPEALS BOARDS: ASSESSMENT APPEALS COMMISSIONERS
This bill would allow counties with populations of 500,000 or more to establish, by ordinance, single-member assessment appeals commissioners to hear and decide property tax assessment appeals. Commissioners would be required to meet specified professional qualifications, and the State Board of Equalization would be tasked with developing rules to ensure consistent hearing procedures, public access, and decision-making standards. The bill would operate as a pilot program from January 1, 2027 to January 1, 2034.
Status: Presented to the Governor, 8/31/26.
AB 2180 (WARD, D) PROPOSITION 218 OMNIBUS IMPLEMENTATION ACT: PROPORTIONAL COST OF SERVICE
AB 2180 would revise how local governments may demonstrate proportionality for property-related fees and charges under Proposition 218. Existing law requires these fees and charges to be proportionate to the cost of service attributable to the parcel. Specifically, the bill would authorize a local government to demonstrate that proportional cost using any method that reasonably allocates the ascertainable cost of providing the service across all parcels, if the method is substantiated. This may be relevant to local agencies that set or adjust water, wastewater, sewer, refuse, or other property-related fees subject to Proposition 218.
Status: Presented to the Governor, 8/25/26.
SB 974 (SEYARTO, D) PROPERTY TAXATION: CHANGE IN OWNERSHIP: GENERATIONAL TRANSFERS: SPECIAL NEEDS TRUSTS
Current property tax law authorizes an owner of a primary residence who is over 55 years of age, severely and permanently disabled, or a victim of a wildfire or natural disaster to transfer the taxable value of property that is eligible for either the homeowners’ exemption or the disabled veterans’ exemption to any replacement dwelling that is purchased or newly constructed as that person’s principal residence within 2 years of the sale of the original primary residence. This bill would require a county assessor to determine that a claimant is eligible as severely and permanently disabled if the assessor receives a letter certifying a qualifying special needs trust. The assessor could issue a preliminary eligibility determination, but if the trust does not provide the required certification letter within five years, the claimant would owe property tax based on the appraised value of the replacement dwelling for the years since the transfer. The bill would also require the State Department of Health Care Services to establish a process for requesting and issuing special needs trust certification letters.
Status: Presented to the Governor, 9/2/26.
SB 1053 (NIELLO, R) PROPERTY TAXATION: TRANSFER OF BASE YEAR VALUE: DISASTER RELIEF
Current property tax law provides that the property tax base year value of real property that is substantially damaged or destroyed by a disaster, as declared by the Governor, may be transferred to a comparable property located within the same county that is acquired or newly constructed, or to replacement property reconstructed on the site of the damaged or destroyed property, within 5 years after the disaster as a replacement property. This bill would authorize the county board of supervisors of any county proclaimed by the Governor to be in a state of emergency or otherwise determined or declared by the Governor to be in a state of disaster, on or after January 1, 2026, but before January 1, 2031, to extend both of the above-described time periods to transfer by up to 3 years.
Status: Failed to advance by 8/31/26, effectively dead.
SB 1415 (ARREGUÍN, R) REAL PROPERTY TAX: WELFARE EXEMPTION: MODERATE-INCOME HOUSING
Existing property tax law, pursuant to constitutional authorization, provides for a “welfare exemption” for property used exclusively for religious, hospital, scientific, or charitable purposes and that is owned or operated by certain types of nonprofit entities, if certain qualifying criteria are met. That law provides a partial welfare exemption in the case of residential rental property used for lower income households, as specified, calculated as that percentage of the value of the property that is equal to the percentage that the number of units serving lower income households represents of the total number of residential units. This bill would provide a partial welfare exemption in the case of certain residential rental property used for low- and moderate-income households. The partial exemption would be equal to that percentage of the value of the property that is equal to the percentage that the number of units serving low- and moderate-income households, as defined, represents of the total number of residential units. The bill would require an owner to make specified certifications relating to the use of the property. By expanding the duties of local tax officials, and by expanding the crime of perjury, the bill would impose a state-mandated local program. This bill contains other related provisions and other existing laws.
Status: Failed to advance by 8/31/26, effectively dead.
SALES AND USE TAX LEGISLATION
AB 1783 (DEMAIO, R) ADDITIONAL LOCAL TAXES: VEHICLES MILES TRAVELED TAX
Current law authorizes the legislative body of a city or county to impose various taxes, including occupancy taxes and sales and use taxes. Existing law also prohibits a city and county from imposing certain taxes, such as a tax upon income. This bill would prohibit a city, county, or any political subdivision thereof from imposing a tax, fee, assessment, or charge, which is calculated, in whole or in part, based on the number of miles traveled by a motor vehicle. The bill would not prohibit the collection of tolls for the use of specific facilities, as provided. The bill would provide that any existing program, pilot program, regulation, or administrative action inconsistent with this prohibition is void and unenforceable.
Status: Failed to advance by 8/31/26, effectively dead.
AB 2069 (KRELL, D) SALES AND USE TAX LAW: EXEMPTION: FAIRGROUNDS
Current state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes. This bill, the Fairground Economic Opportunity Act, would state the intent of the Legislature to establish an exemption applicable to fairgrounds from the taxes imposed by this part as an economic tool to drive further development opportunities at fairgrounds.
Status: Failed to advance by 8/31/26, effectively dead.
AB 2192 (GONZALEZ, R) SALES AND USE TAXES: FARM EQUIPMENT AND MACHINERY
The Sales and Use Tax Law provides various exemptions from taxes, including an exemption for the sale of, or the storage, use, or consumption of, farm equipment and machinery purchased for use by a qualified person to be used primarily in producing and harvesting agricultural products. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes cities and counties to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and current law excludes the above exemption from being incorporated into certain local taxes. This bill would delete that exclusion, which would allow the exemption for farm equipment and machinery to apply to local sales taxes.
Status: Failed to advance by 8/31/26, effectively dead.
SB 122 (COMMITTEE ON BUDGET AND FISCAL REVIEWS) TAXATION
This bill expands the definition of tangible personal property for sales and use tax purposes to include certain digital products. Beginning January 1, 2027, prewritten computer software, including Software-as-a-Service (SaaS) will generally be subject to sales and use tax regardless of how it is delivered, including software transferred on tangible media, downloaded electronically, or accessed remotely. The bill also establishes provisions addressing the sourcing and taxation of these transactions and makes corresponding changes affecting local sales and use taxes and transactions and use taxes.
Status: Chaptered by Secretary of State, Chapter 23, Statutes of 2026.
SB 1151 (CERVANTES, D) SALES AND USE TAX LAW: EXEMPTIONS: INFANT FORMULA
Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including an exemption for the gross receipts from the sale of, and the storage, use, or other consumption in this state of, food products for human consumption. This bill would specify that “food products” includes infant formula.
Status: Presented to the Governor, 8/28/26.
SB 1275 (MCNERNEY, D) SALES AND USE TAX LAW: EXEMPTION: VEHICLE LICENSE FEE IMPOSITION: MOTOR VEHICLES
Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes. This bill would, on and after January 1, 2027, and before January 1, 2032, exempt from those taxes the gross receipts from the sale of, and the storage, use, or other consumption of a new motor vehicle.
Status: Failed to advance by 8/31/26, effectively dead.
SB 1406 (MCNERNEY, D) SALES AND USE TAX LAW: VEHICLES: SHELL COMPANIES
This bill would expand California’s use tax rules for vehicles, vessels, and aircraft brought into the state within 12 months of purchase. It would treat partnerships, limited partnerships, and limited liability partnerships as California residents when at least 50% of ownership interests are held by California residents. It would also treat a shell company as a California resident if any shareholder, partner, member, or beneficial owner is a California resident. Officers, managers, partners, beneficial owners, or members of a shell company could be personally liable for unpaid taxes, interest, and penalties related to these purchases.
Status: Presented to the Governor, 9/3/26.
SB 1424 (ARCHULETA, D) SALES AND USE TAXES: ZERO-EMISSION VEHICLE FUELING
The proposed legislation would expand California’s partial sales and use tax exemption for qualified manufacturing and related equipment. The bill would add qualified property used exclusively to process, alter, convert, or condition hydrogen or electricity for fueling zero-emission vehicles. It would also extend the exemption to qualified property purchased by contractors for construction contracts when the property will be used as an integral part of eligible zero-emission vehicle fueling activities. Because exemption certificates are signed under penalty of perjury, the bill would create a state-mandated local program by expanding the scope of an existing crime.
Status: Failed to advance by 8/31/26, effectively dead.
AB 2641 (RODRIGUEZ, D) SALES AND USE TAXES: EXCLUSION: PAWNBROKERS: TRANSFER OF VESTED PROPERTY
This bill would extend an existing sales and use tax exclusion for certain pawn transactions. Current law, scheduled to expire on January 1, 2027, excludes from the definitions of “sale” and “purchase” the transfer of vested property by a pawnbroker back to the person who pledged the property as loan security, if specified requirements are met. This means the transfer is not subject to sales or use tax. The bill would extend that exclusion until January 1, 2032.
Status: Chaptered by Secretary of State, Chapter 76, Statutes of 2026.
UTILITY USERS TAX LEGISLATION
AB 2279 (GIPSON, D) CALIFORNIA ADVANCED SERVICES FUND: RURAL AND URBAN REGIONAL BROADBAND CONSORTIA GRANT ACCOUNT
This bill revises the use of funds in the Rural and Urban Regional Broadband Consortia Account to emphasize support for broadband infrastructure deployment, primarily by assisting applicants with project development and grant applications. It authorizes consortia to also promote broadband adoption in specified areas, including regions with recent infrastructure investments or identified local needs. The measure requires the Public Utilities Commission to provide multi-year funding to support ongoing regional coordination and planning efforts. Consortia would be expected to convene stakeholders and implement regional work plans aligned with a standardized scope established by the commission. Overall, the bill expands both the funding structure and the range of activities to strengthen broadband deployment and adoption efforts statewide.
Status: Failed to advance by 8/31/26, effectively dead.
SB 716 (DURAZO, D) LIFELINE PROGRAM: BROADBAND INTERNET ACCESS SERVICE
The Moore Universal Telephone Service Act establishes the Universal Lifeline Telephone Service program to provide low-income households with access to affordable basic residential phone service. This bill expands the program to allow internet service providers to offer qualifying broadband internet plans as an optional lifeline service. To qualify for subsidies, providers must offer at least one plan meeting specified minimum speed and affordability thresholds, with flexibility for adjustments in certain areas. The Public Utilities Commission would be required to evaluate fiscal impacts, including potential changes to surcharge rates, subject to limits on increases. The measure establishes deadlines for implementation, reporting, and rulemaking, and includes a sunset date of January 1, 2032. Overall, the bill seeks to incorporate broadband internet access into existing lifeline service programs while maintaining cost controls and legislative oversight.
Status: Engrossing and enrolling, 8/31/2026.
OTHER LEGISLATION OF NOTE
AB 1383 (MCKINNOR, D) PUBLIC EMPLOYEES’ RETIREMENT BENEFITS
This bill proposes changes to California’s public employee retirement system under the Public Employees’ Pension Reform Act of 2013 (PEPRA), primarily affecting how pension benefits are calculated and administered. It would align limits on pensionable compensation with applicable federal standards and allow adjustments to those limits over time. The bill also modifies retirement formulas for safety employees by establishing new benefit structures tied to an earlier retirement age (e.g., age 55 instead of 57) and permitting additional formula options, while maintaining restrictions against retroactive benefit increases. Additionally, it authorizes public employers and employee organizations to negotiate prospective changes to retirement benefit formulas within the framework of existing law. Overall, the measure updates pension limits and provides greater flexibility in structuring future retirement benefits for eligible public employees, particularly in public safety roles.
Status: Engrossing and enrolling, 8/30/26.
SB 922 (LAIRD, D) VEHICLES: LOCAL AGENCY CHARGES: USE OF STREETS OR HIGHWAYS
Current law prohibits a local agency from imposing a tax, permit fee, or other charge for the privilege of using its streets or highways, other than a permit fee for an extralegal load unless the local agency had imposed the fee prior to June 1, 1989. This bill would expressly limit this prohibition to charges based on weight. The bill would also explicitly state that a fee, charge, or surcharge imposed by or for a local agency to recover the cost of street maintenance and repair and other costs associated with the use of its streets, roads, or highways to provide public services or public works is not a tax, permit fee, or other charge that is prohibited by the provision above.
Status: Chaptered by Secretary of State, Chapter 148, Statutes of 2026.
SB 1035 (STRICKLAND, R) VEHICLES: LOCAL AGENCY CHARGES: USE OF STREETS OR HIGHWAYS
This bill proposes a one-year suspension of the Low Carbon Fuel Standard regulations and related market-based compliance mechanisms affecting transportation fuel suppliers. It also suspends the state motor vehicle fuel tax for one year and requires sellers to provide purchasers with receipts showing the amount of tax that would otherwise have applied. The measure directs the State Controller to transfer specified General Fund revenues to both the Greenhouse Gas Reduction Fund and the Motor Vehicle Fuel Account to offset lost revenue resulting from the suspensions. The bill is designated as an urgency statute and would take effect immediately if enacted.
Status: Failed to advance by 8/31/26, effectively dead.
SB 1265 (RICHARDSON, D) CALIFORNIA ALTERNATIVE ENERGY AND ADVANCED TRANSPORTATION FINANCING AUTHORITY: GOGREEN PROGRAM
Proposed legislation would formally require the California Alternative Energy and Advanced Transportation Financing Authority to administer the GoGreen Program, formerly known as the California Hub for Energy Efficiency Financing program. The program would support residents by helping participating lenders offer financing for eligible energy efficiency and decarbonization improvements at rates that are competitive with, or below, market rates. The bill would allow the authority to use ratepayer funds collected from specified electric and gas corporations, as directed by the Public Utilities Commission, along with other available funding sources consistent with the program’s purposes.
Status: Failed to advance by 8/31/26, effectively dead.
SB 1349 (GONZALEZ, D) TAXATION EXPENDITURES: CALIFORNIA TAX EXPENDITURE REVIEW BOARD
Existing law, including, but not limited to, property tax law, the Sales and Use Tax Law, the Personal Income Tax Law, the Corporation Tax Law, the Motor Vehicle Fuel Tax Law, the law governing the taxation of insurers, the Use Fuel Tax Law, and the Diesel Fuel Tax Law, provides for tax expenditures, including exemptions, deductions, exclusions, and credits against the taxes imposed by those laws. This bill would establish in state government the California Tax Expenditure Review Board as an independent advisory body to comprehensively assess major tax expenditures, as defined, and make recommendations to the Legislature. The bill would require the board to be composed of five members who would serve without compensation. This bill contains other related provisions.
Status: Presented to the Governor, 8/28/26.
