California tax return changes for 2026

SB 711, the Conformity Act of 2025, moved California’s specified IRC date from January 1, 2015 to January 1, 2025 for tax years beginning on or after January 1, 2025. Several long-standing Schedule CA instructions were removed as a result, and Schedule CA gained lines 2b and 19c for alimony.

The FTB’s summary of federal changes lists the One Big Beautiful Bill Act provisions one by one. California does not conform to the tips, overtime or car loan interest deductions (it does follow the related information return rules), full expensing of business property, the qualified production property allowance or domestic research expensing.

SB 132 extends the PTE elective tax and credit to taxable years beginning in 2026 through 2030. A PTE that misses or underpays the June 15 prepayment can still elect, but the owners’ credit is reduced by 12.5%. Put the June 15 date on every electing client’s calendar now.

• SB 1435 makes the federal business interest limit inapplicable for California personal income tax, for tax years beginning on or after January 1, 2025.
• SB 132 adds an exclusion for qualified wildfire settlement amounts and a new film credit (Program 4.0).
• For LPs, LLPs and LLCs first required to file for years beginning in 2027 through 2029, SB 122 cuts the first-year annual tax from $800 to $400.
• New for 2026: Form FTB 3822, the Eligible Transmission Project Tax Credit.

Non-conformity means two depreciation schedules and two research cost schedules for many business clients. Keep asset additions and research spending in clearly named accounts in HelloBooks so the federal and California numbers start from the same ledger. California penalties are covered at /us/penalties/california and sales tax at /us/sales-tax/california.