Quick-Service Restaurant Young Workforce Apprenticeship Program: tax credits.

All original amendments to Section 1475 of the Labor Code were removed, including provisions on Fast Food Council composition, minimum wage standards ($20/hour effective April 1, 2024), enforcement mechanisms, preemption of local wage ordinances, and the council's sunset date of January 1, 2029.

A new Article 7 (Sections 3130-3133) was added to Chapter 4 of Division 3 of the Labor Code, creating the Quick-Service Restaurant Young Workforce Apprenticeship Program. The Division of Apprenticeship Standards must establish and administer the program upon legislative appropriation, providing grants, reimbursements, or other funding to apprenticeship programs supporting quick-service restaurant youth apprenticeships.

Section 17053.92 was added to the Revenue and Taxation Code, allowing a $1,000 personal income tax credit for each registered apprentice continuously employed for at least six months by a qualified taxpayer, capped at 100 apprentices per taxable year per taxpayer. Available for taxable years beginning on or after January 1, 2026 and before January 1, 2031.

Section 23684 was added to the Revenue and Taxation Code, providing a parallel $1,000 corporation tax credit with the same eligibility requirements, cap, and time period as the personal income tax credit.

A 'registered apprentice' must be between 16 and 22 years old at application, paid at least 85 percent of the state-mandated fast food minimum wage, enrolled in high school or GED preparation (or have obtained a diploma/GED during the program), and trained through an apprenticeship program approved by the Division of Apprenticeship Standards and registered with the U.S. Department of Labor's Office of Apprenticeship, with a minimum six-month part-time employment term.

A 'qualified taxpayer' is defined as a 'participating small franchisee employer,' meaning a fast food restaurant operator that owns fewer than 50 stores and elects to participate in the apprenticeship program while complying with the act's requirements.

Taxpayers must obtain a certificate from the Division of Apprenticeship Standards for each taxable year before claiming the credit. The division must verify the taxpayer is training a qualifying apprentice, provide the certificate, annually share lists of certified taxpayers and apprentices with the Franchise Tax Board, and notify the board if training is terminated early.

If an apprentice's training is terminated before program completion, any unused credit carryover is canceled and previously claimed credits are recaptured by increasing the tax for that year. Exceptions apply if the apprentice voluntarily leaves, becomes disabled, is terminated for misconduct, or the taxpayer experiences a substantial business reduction.

The Division of Apprenticeship Standards must prepare annual reports on the tax credits for each of the five calendar years from 2026 through 2030, submitted to the Assembly and Senate Rules Committees by December 1 of the following year (first report due December 1, 2027). Both tax credit sections sunset on December 1, 2031.

Excess credits that exceed the taxpayer's net tax or corporate tax may be carried forward for up to three succeeding years. Deductions for training expenses must be reduced by the amount of the credit allowed.