An act to amend Section 23151 17131.12 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
SB 573 would make two separate changes to California tax law. First, it would extend the existing personal income tax exclusion for payments received from guaranteed income pilot programs or related grants, keeping those payments out of gross income until July 1, 2031, and repealing the exclusion on January 1, 2032. The bill states that the purpose of the extension is to continue providing financial relief to vulnerable Californians, and it adds the findings required for a new tax expenditure under Revenue and Taxation Code Section 41.
Second, the bill would create a new corporate tax structure for publicly held corporations beginning with taxable years on or after January 1, 2026. Instead of the current flat corporation tax rate, the bill would impose a graduated rate from 7% to 13% based on a corporation’s compensation ratio, which compares the compensation of the CEO or highest-paid employee to the median compensation of U.S. employees. Financial institutions that are publicly held would face a parallel graduated range from 9% to 15%. The bill also authorizes a 50% rate increase for corporations that reduce U.S. full-time employment by more than 10% while increasing contracted or foreign full-time employees, and it requires affected taxpayers to file detailed compensation reports with the Franchise Tax Board.
The bill would amend the Revenue and Taxation Code and would take effect immediately as a tax levy. Because the corporate tax provisions would increase taxes for some taxpayers, the bill is identified as requiring a two-thirds vote for passage under the California Constitution. It would also give the Franchise Tax Board broad authority to issue rules and guidance to implement the new compensation-ratio tax provisions.
Overall, the bill appears to combine a policy extension aimed at supporting guaranteed income pilot participants with a more controversial corporate tax increase tied to executive pay and workforce composition. The available context shows no recorded committee transcript or vote history, so there is no documented floor or committee debate in the provided materials. Based on the bill text alone, the guaranteed-income extension is framed as a social-support measure, while the corporate tax changes are likely to draw scrutiny from business interests because they would raise rates for some publicly held corporations and penalize certain staffing patterns.
SB 573 would amend Revenue and Taxation Code Section 17131.12 to extend the exclusion from gross income for guaranteed income pilot program payments, affecting individual recipients of qualifying pilot grants and delaying the sunset of that exclusion. It would also amend Revenue and Taxation Code Section 23151 to replace the standard corporation tax rate for publicly held corporations with a graduated compensation-ratio-based rate structure, including a higher-rate penalty for certain reductions in U.S. full-time employment. The bill would therefore affect both individual income tax treatment and corporate income tax liability, with implementation and reporting duties assigned to the Franchise Tax Board.
The bill’s stated policy rationale is supportive of vulnerable Californians through the guaranteed income extension, suggesting favorable sentiment toward that portion of the measure. The corporate tax provisions, however, are structured as a tax increase for certain publicly held corporations and financial institutions and would likely be viewed more negatively by affected business taxpayers. Because no committee transcript or vote record is provided, the available materials do not show direct debate, amendments in response to opposition, or recorded support/opposition beyond the bill’s text and procedural posture.
The main point of contention is the corporate tax redesign. Supporters would likely emphasize tying tax rates to executive compensation and discouraging offshoring or contractor substitution, while opponents would likely object to higher taxes on publicly held corporations, the complexity of the compensation-ratio formula, and the workforce-based penalty. A secondary, less contentious issue is the guaranteed income exclusion extension, which is framed as a continuation of financial relief and appears more policy-oriented than controversial. The bill’s two-thirds vote requirement also signals that the tax increase component is legally significant and likely to be the focus of debate.