An act relating to the Budget Act of 2025. An act to amend Sections 6041.2, 6295, 7292.8, 17039, 17039.4, 17052.10, 17053.91, 17053.98.1, 17055, 19282, 23691, 23698.1, 25128, and 36001 of, to amend the heading of Part 16 (commencing with Section 36001) of Division 2 of, to add Section 36006 to, to repeal Section 7292.9 of, to add and repeal Sections 17052.11, 17132.9, 17132.10, 17138.7, 17157.5, 24309.2, and 24309.9 of, and to add and repeal Part 10.4.1 (commencing with Section 19910) of Division 2 of, the Revenue and Taxation Code, and to add Section 10010 to the Welfare and Institutions Code, relating to taxation, and making an appropriation therefor, to take effect immediately, bill related to the budget.
AB 132 is a broad Budget Act trailer bill that makes a wide range of tax and fiscal changes, most of them temporary and tied to the 2025-26 budget. It would revise sales and use tax administration for certain vehicle dealers, expand the Marketplace Facilitator Act to additional electronic waste fees, and clarify Sonoma County’s special authority to impose transactions and use taxes. It also creates or extends several personal income and corporation tax provisions, including exclusions for military retirement pay and survivor benefits, wildfire settlement payments, and Chiquita Canyon landfill-related payments, along with new or extended elective tax credits for pass-through entities.
The bill also significantly expands California’s film tax credit program by raising the annual allocation cap for the newer motion picture credit to $750 million, adding and extending refundability and reporting requirements, and continuing diversity, workforce, and career-pathways provisions. It extends historic rehabilitation credits, including a reallocation mechanism for affordable housing projects, and changes business tax apportionment rules by removing banking and financial business activities from a special formula. In addition, it renames and expands the firearm excise tax provisions, and it increases Franchise Tax Board collection-cost limits for court-ordered debt collections.
Its impact on state law is substantial because it amends multiple Revenue and Taxation Code sections, adds new sections, repeals some temporary provisions, and creates new temporary exclusions and credits with sunset dates. It also affects the Welfare and Institutions Code by directing that Chiquita Canyon payments not count as income or resources for means-tested benefits and guaranteed income programs. Several provisions are expressly tied to federal law or budget conditions, and the bill includes appropriation language and immediate-effect provisions, meaning it would take effect as part of the budget package if enacted.
The overall sentiment reflected in the voting history is generally favorable, at least at the committee and floor stages shown. The Assembly third reading vote was 53-17, and the June 25 committee vote was 15-1, suggesting substantial support for the bill’s budget-related tax relief and industry incentive provisions. The absence of committee transcript material limits insight into detailed debate, but the vote margins indicate the bill was moving with broad majority support.
The main points of contention are likely the bill’s size and fiscal scope rather than any single provision. The most controversial elements are the large increase in the film credit cap, the creation and extension of multiple tax expenditures, and the firearm excise tax changes, which expand the scope of an existing tax-related crime. Other potentially sensitive issues include the special treatment of Sonoma County tax authority, the business tax apportionment change affecting financial businesses, and the use of temporary exclusions and credits that reduce state revenue while requiring two-thirds legislative approval.
AB 132 would amend numerous provisions of the Revenue and Taxation Code and add new temporary exclusions, credits, and administrative rules affecting sales and use taxes, income taxes, corporate apportionment, court collections, and excise taxes. It would also add a new Welfare and Institutions Code section preventing certain Chiquita Canyon landfill payments from counting as income or resources for specified public benefits and guaranteed income programs. The bill would increase the annual cap on the motion picture production credit, extend and modify elective pass-through entity tax provisions, adjust historic rehabilitation credit allocation rules, and remove banking and financial business activities from a special apportionment formula. Several provisions sunset in future years, while others take effect immediately as budget-related appropriations.
The available vote history suggests the bill was generally supported by a strong majority. It passed the Assembly on third reading 53-17 and later received a 15-1 committee vote, indicating broad backing among members who voted. Because no committee transcript was provided, there is no recorded debate to show detailed arguments, but the voting pattern points to a favorable overall sentiment toward the budget package and its mix of tax relief, industry incentives, and targeted exclusions.
Likely areas of contention include the bill’s large fiscal impact, especially the increase in the film tax credit cap to $750 million and the extension of multiple tax expenditures that reduce state revenue. The firearm excise tax provisions may also draw opposition because they expand the scope of an existing tax-related crime and reframe out-of-state retail transactions. Financial institutions may object to the removal of banking and financial business activities from the special apportionment formula, while some local governments or taxpayers may have concerns about the Sonoma County tax authority changes and the administrative complexity of the temporary exclusions and benefit rules. Supporters, by contrast, appear to favor the bill’s targeted relief for military families, wildfire and Chiquita Canyon victims, affordable housing rehabilitation, and film industry jobs.