Income taxes: credits: rehabilitation of certified historic structures.

The sunset date for the 2027+ credit program was extended from January 1, 2031 to January 1, 2032, adding one additional taxable year (2031) to the program's duration.

Fixed biannual application windows (August 1-31 and February 1-28, with allocations announced by October 15 and April 15) were removed, giving the administering agencies more flexibility in scheduling.

The scoring system that ranked applicants based on qualified rehabilitation expenditures plus housing units multiplied by $600,000 was removed. Allocation reverts to a first-come-first-served basis subject to available funding.

Geographic allocation requirements mandating 40 percent of credits go to northern California, 40 percent to southern California, and 20 percent to central California were removed.

The reservation of 20 percent of available credits for applicants with qualified rehabilitation costs under $2.5 million was removed.

The annual funding cap for the 2027+ credit program was changed from a fixed statutory amount to an amount set by the Legislature each year in the Budget Act or another measure. If no appropriation is made, the credit amount defaults to zero.

The new credit period is extended from January 1, 2027 through January 1, 2031 to January 1, 2027 through January 1, 2032, adding one additional year of eligibility.

The fixed $50 million annual allocation cap is removed for the new credit period (2027-2032). Instead, the amount available each year must be set by the Legislature in the annual Budget Act or another measure, giving the Legislature direct control over funding levels.

A per-taxpayer cap of $5,000,000 is added for the new credit period, limiting how much any single taxpayer can receive.

The 25 percent enhanced credit tier is eliminated for the new period. The Assembly version allowed a higher 25 percent rate for projects on surplus property, affordable housing, designated census tracts, military base reuse sites, and transit-oriented developments. The Senate version provides only a flat 20 percent credit.

The qualified residence (homeowner) credit is removed from the new period. The Assembly version allowed individual homeowners with modified adjusted gross income of $200,000 or less to claim a credit between $5,000 and $25,000 for rehabilitating their principal residence.

A new scoring and ranking system replaces first-come-first-served allocation. Applicants are ranked by a monetary score equal to the sum of (1) qualified rehabilitation expenditures and (2) the number of housing units created, preserved, or rehabilitated multiplied by $600,000.

Geographic distribution requirements mandate that 40 percent of credits go to northern California, 40 percent to southern California, and 20 percent to central California, with specific county lists defining each region.

Additional application documentation requirements are added, including proof of site control, housing unit projections, evidence of a financing gap, a requirement that the project commence within 180 days of allocation, and an attestation that the project has not already been completed.

A biannual allocation schedule is established: applications accepted August 1-31 (allocations announced by October 15) and February 1-28 (allocations announced by April 15).

A definition of 'housing unit' is added: one or more habitable rooms occupied or designed to be occupied by one family with facilities for living, sleeping, cooking, and eating.

The 30 percent enhanced tax credit for certified historic structures used to preserve existing affordable housing or adaptively reused for housing (with at least 50 percent floor area for housing) is eliminated. For taxable years 2027-2031, all projects receive a flat 20 percent credit with no enhanced rate.

The bill's title was narrowed to amend only Sections 38.10 and 17053.91 (previously also listed Section 23691), reflecting the structural reorganization into separate sections for the two time periods.

The qualified residence tax credit (capped between $5,000 and $25,000 per taxpayer, once every 10 years) is removed for the 2027-2031 period. The new Section 17053.92 contains no provision for residential rehabilitation credits.

For taxable years 2027-2031, the credit amount defaults to zero dollars unless otherwise specified in a Budget Act appropriation bill. This replaces the previous fixed $50 million annual cap with a mechanism requiring separate legislative appropriation each year.

A new per-taxpayer maximum credit of $5 million is imposed for the 2027-2031 period under Section 17053.92, which did not exist in the prior version's extended timeframe.

The bill now creates two distinct statutory sections with different sunset dates: Section 17053.91 expires December 31, 2027 (covering 2021-2026), and new Section 17053.92 expires December 31, 2031 (covering 2027-2030). The Legislative Analyst review requirement is split into a one-time review of 2025-2027 activity (due July 1, 2028) and an annual review for 2027-2031.

New Sections 17053.92 (individual income tax) and 23692 (corporate franchise tax) are added to create a parallel credit regime for taxable years beginning on or after January 1, 2027, and before January 1, 2031.

For credits allocated for taxable years beginning on or after January 1, 2027, the annual cap of $50 million in aggregate credits (plus carryover) is removed, along with the $10 million reservation set aside for qualified residences ($2M) and smaller projects under $1 million ($8M).

For taxable years beginning on or after January 1, 2027, the 25 percent increased credit tier (available for structures on surplus property, with affordable housing, in designated census tracts, military base reuse, or transit-oriented development) is removed.

For taxable years beginning on or after January 1, 2027, the qualified residence credit (allowing $5,000 to $25,000 for rehabilitation of a historic home owned by a taxpayer with MAGI of $200,000 or less) is removed.

The definition of 'affordable housing for lower income households' in the 30 percent credit criteria (for years on/after 2027) is simplified to reference only rent limits established by the California Tax Credit Allocation Committee, removing the prior cross-reference to Section 50079.5 of the Health and Safety Code.

The Legislative Analyst's annual review requirement in Section 38.10 now begins January 1, 2027 (previously 2021) and references the new Sections 17053.92 and 23692 instead of the old sections.

The sunset date for the entire tax credit program is extended from January 1, 2027 to January 1, 2031, in both the personal income tax section (17053.91) and the corporate tax section (23691). The Legislative Analyst annual review requirement is also extended to match.

The annual $50 million tax credit allocation now runs through calendar year 2031 instead of 2027, adding four additional years of funding for historic rehabilitation projects.

A new definition is added for the 30% credit tier (applicable to taxable years beginning on or after January 1, 2027): 'affordable housing for lower income households' means housing at a rental amount consistent with the rent limits established by the California Tax Credit Allocation Committee. This appears in both the personal and corporate tax sections.

The term 'lower-income households' is changed to 'lower income households' (hyphen removed) throughout, aligning terminology across the bill.