Rev. & Tax. Code, § 17039.6 · Chapter 1. General Provisions and Definitions
Rev. & Tax. Code, § 17039.6
Text — As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
(a) Notwithstanding any provision of this part or Part 10.2 (commencing with Section 18401) to the contrary, for taxpayers not required to be included in a combined report under Section 25101 or 25110, or taxpayers not authorized to be included in a combined report under Section 25101.15, for each taxable year beginning on or after January 1, 2030, the total of all business credits otherwise allowable under any provision of Chapter 2 (commencing with Section 17041), including the carryover of any business credit under a former provision of that chapter, for the taxable year shall not reduce the “net tax,” as defined in Section 17039, by more than 70 percent or five million dollars ($5,000,000), whichever is greater.
(b) Notwithstanding any provision of this part or Part 10.2 (commencing with Section 18401) to the contrary, for taxpayers required to be included in a combined report under Section 25101 or 25110, or taxpayers authorized to be included in a combined report under Section 25101.15, for each taxable year beginning on or after January 1, 2030, the total of all business credits otherwise allowable under any provision of Chapter 2 (commencing with Section 17041), including the carryover of any business credit under a former provision of that chapter, by all members of the combined report shall not reduce the aggregate amount of “tax,” as defined in Section 23036, of all members of the combined report by more than 70 percent or five million dollars ($5,000,000), whichever is greater.
(c) For purposes of this section, “business credit” means a credit allowable under any provision of Chapter 2 (commencing with Section 17041) other than the following credits:
(1) The credit allowed by Section 17052 (relating to credit for earned income).
(2) The credit allowed by Section 17052.1 (relating to credit for young child).
(3) The credit allowed by Section 17052.2 (relating to credit for foster youth).
(4) The credit allowed by Section 17052.6 (relating to credit for household and dependent care).
(5) The credit allowed by Section 17052.10 or 17052.11 (relating to the elective tax under the Small Business Relief Act).
(6) The credit allowed by Section 17052.25 (relating to credit for adoption costs).
(7) The credit allowed by Section 17053.5 (relating to renter’s tax credit).
(8) The credit allowed by Section 17054 (relating to credit for personal exemption).
(9) The credit allowed by Section 17054.5 (relating to credit for qualified joint custody head of household and a qualified taxpayer with a dependent parent).
(10) The credit allowed by Section 17054.7 (relating to credit for qualified senior head of household).
(11) The credit allowed by Section 17058 (relating to credit for low-income housing).
(12) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code).
(d) Any amounts included in an election pursuant to Section 6902.5, relating to an irrevocable election to apply credit amounts under Section 17053.85, 17053.95, 17053.98, 17053.98.1, 23685, 23695, 23698, or 23698.1 against qualified sales and use tax, as defined in Section 6902.5, are not included in the limitation set forth in subdivision (a) or (b).
(e) Any annual refundable credit amount included in an election pursuant to Section 17039.5 is not included in the limitation set forth in subdivision (a) or (b).
(f) If an election is made pursuant to subdivision (k) of Section 17053.98.1, both the credit allowed against the “net tax” under clause (i) of subparagraph (A) of paragraph (3) of subdivision (k) of Section 17053.98.1 and the annual refundable amount calculated under subdivision (k) of Section 17053.98.1 shall not be included in the limitation set forth in subdivisions (a) and (b) of this section.
(g) Any credit, or portion thereof, sold pursuant to paragraph (1) of subdivision (c) of Section 17053.95, 17053.98, or 17053.98.1, paragraph (3) of subdivision (c) of Section 23695 or 23698, or paragraph (2) of subdivision (c) of Section 23698.1, is not included in the limitation set forth in subdivision (a) or (b).
(h) The amount of any credit otherwise allowable for the taxable year under Section 17039 that is not allowed due to application of this section shall remain a credit carryover amount under this part.
(i) Notwithstanding anything to the contrary in this part or Part 10.2 (commencing with Section 18401), the credits listed in subdivision (c) shall be applied after any business credits, as limited by subdivision (a) or (b), are applied.
(j) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.
Notes and commentary — not statutory text
History
Amended by Stats. 2026, Ch. 344, Sec. 2. (SB 186) Effective September 19, 2026.
Source of truth
- Edition
- As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
- Official file
- https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17039.6.
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This section cites
Provisions in this library that the text above cites, as it prints each citation. A range cited as “ss. 61.13-61.16” links its first and last provisions.
Revenue and Taxation Code
- Rev. & Tax. Code, § 6902.5Printed as Section 6902.5
- Rev. & Tax. Code, § 17039Printed as Section 17039
- Rev. & Tax. Code, § 17039.5Printed as Section 17039.5
- Rev. & Tax. Code, div. 2, pt. 10, ch. 2Imposition of TaxPrinted as Chapter 2 (commencing with Section 17041)
- Rev. & Tax. Code, § 17052Printed as Section 17052
- Rev. & Tax. Code, § 17052.1Printed as Section 17052.1
- Rev. & Tax. Code, § 17052.6Printed as Section 17052.6
- Rev. & Tax. Code, § 17052.10Printed as Section 17052.10 or 17052.11
- Rev. & Tax. Code, § 17052.11Printed as Section 17052.10 or 17052.11
- Rev. & Tax. Code, § 17052.2Printed as Section 17052.2
- Rev. & Tax. Code, § 17052.25Printed as Section 17052.25
- Rev. & Tax. Code, § 17053.5Printed as Section 17053.5
- Rev. & Tax. Code, § 17053.85Printed as Section 17053.85, 17053.95, 17053.98, 17053.98
- Rev. & Tax. Code, § 17053.95Printed as Section 17053.85, 17053.95, 17053.98, 17053.98 | Section 17053.95, 17053.98, or 17053.98
- Rev. & Tax. Code, § 17053.98Printed as Section 17053.85, 17053.95, 17053.98, 17053.98 | Section 17053.95, 17053.98, or 17053.98 | Section 17053.98
- Rev. & Tax. Code, § 17054Printed as Section 17054
- Rev. & Tax. Code, § 17054.5Printed as Section 17054.5
- Rev. & Tax. Code, § 17054.7Printed as Section 17054.7
- Rev. & Tax. Code, § 17058Printed as Section 17058
- Rev. & Tax. Code, § 17061Printed as Section 17061
- Rev. & Tax. Code, div. 2, pt. 10.2ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWSPrinted as Part 10.2 (commencing with Section 18401)
- Rev. & Tax. Code, § 23695Printed as Section 23695 or 23698
- Rev. & Tax. Code, § 23698Printed as Section 23695 or 23698
- Rev. & Tax. Code, § 23698.1Printed as Section 23698.1
- Rev. & Tax. Code, § 25101Printed as Section 25101 or 25110
- Rev. & Tax. Code, § 25101.15Printed as Section 25101.15
- Rev. & Tax. Code, § 25110Printed as Section 25101 or 25110
Procedural information only. Not legal advice and not a substitute for the advice of an attorney. Confirm the current text with the official publisher before relying on it.