Income tax credit: sales and use taxes paid: manufacturing equipment: research and development equipment.

Existing law, the Bradley-Burns Uniform Local Sales and Use Tax Law, authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Exemptions from state sales and use taxes are automatically incorporated into the local tax laws. Existing law, the Sales and Use Tax Law, imposes state 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 a partial exemption from those taxes, on and after July 1, 2014, and before July 1, 2030, for the gross receipts from the sale of, and the storage, use, or other consumption of, qualified tangible personal property, as defined, that is, among other things, purchased by a qualified person for use primarily in manufacturing, processing, refining, fabricating, or recycling of tangible personal property, as specified, or purchased for use by a qualified person to be used primarily in research and development. Existing law prohibits the exemption described above from applying with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, the Bradley-Burns Uniform Local Sales and Use Tax Law or the Transactions and Use Tax Law, sales and use taxes imposed pursuant to certain provisions of the Sales and Use Tax Law, and sales and use taxes imposed pursuant to certain provisions of the California Constitution. The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill would allow, for a taxable year beginning on or after January 1, 2025, and before January 1, 2030, a credit against those taxes to a taxpayer in an amount equal to the amount of tax reimbursement paid during the taxable year for sales tax on gross receipts that would be exempt from taxation under the Sales and Use Tax Law pursuant to the sales and use tax exemption described above but for the provision that prohibits that exemption from applying with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, the Bradley-Burns Uniform Local Sales and Use Tax Law or the Transactions and Use Tax Law, sales and use taxes imposed pursuant to certain provisions of the Sales and Use Tax Law, and sales and use taxes imposed pursuant to certain provisions of the California Constitution. This bill would also allow for a taxable year beginning on or after January 1, 2025, and before January 1, 2030, a similar tax credit against those taxes to a taxpayer in an amount equal to the amount of use tax paid during the taxable year for storage, use, or other consumption that would be exempt from taxation under the Sales and Use Tax Law pursuant to the sales and use tax exemption described above but for the provision that prohibits that exemption from applying with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, the Bradley-Burns Uniform Local Sales and Use Tax Law or the Transactions and Use Tax Law, sales and use taxes imposed pursuant to certain provisions of the Sales and Use Tax Law, and sales and use taxes imposed pursuant to certain provisions of the California Constitution. This bill would require, on or before May 14, 2025, and annually thereafter, the Department of Finance to provide to the legislative budget committees an estimate of the amount of revenue that would not be realized if the credits described above were allowed for that taxable year and would provide that those credits are allowed only for taxable years for which the Legislature appropriates money in the Budget Act for the administration of those credits. Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would make specified findings detailing the goal of the above-described tax credit, performance indicators for determining whether the credit meets that goal, and data collection requirements. This bill would take effect immediately as a tax levy.