Articles Posted in California

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Proponents have filed a California ballot initiative proposing a one-time wealth tax on individuals with more than $1 billion in net worth. The “2026 Billionaire Tax Act” would impose, for tax year 2026, a 5% tax on “all forms of personal property and wealth, whether tangible or intangible” exceeding $1.1 billion, with a slightly lower rate on amounts between $1-$1.1 billion. California residents, part-year residents, and certain trusts would be subject to the tax.  The initiative would also impose penalties ranging from 20-40% for understatements of the tax.

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After nearly a decade in development, the California Franchise Tax Board (FTB) has finalized its amended market-based sourcing regulation under Regulation Section 25136-2, which governs the sourcing of receipts from services and intangible property.

The regulation was approved by the Office of Administrative Law and filed with the Secretary of State on August 27, 2025.  The revised rules will apply to tax years beginning on or after January 1, 2026.  Among the most significant changes to the regulation are:Capture-2-300x101

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In a move to untangle the complexities surrounding sales and use tax in technology transfer arrangements, California’s tax regulator has laid out three major proposals.CDTFA-Logo-Horizontal-Full-2-300x91

SALT attorneys Jeff Vesely and Richard Nielsen dissect these changes—from adding clarification to introducing rebuttable presumptions—that could dial down uncertainty at the crossroads of sales/use tax and tech licensing agreements.

Read more on Pillsbury Law’s website.

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Pillsbury SALT is excited to welcome back Annie H. Huang to the team!

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Annie’s experience focuses on state and local tax matters, including corporate franchise and income, personal income, sales and use, and gross receipts and other local taxes.

Annie brings not only strong legal experience but also a genuine enthusiasm for building relationships and supporting clients through complex challenges.

She joins Pillsbury’s San Francisco office as a partner.  Read more here.

 

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The California Attorney General has confirmed the Office of Tax Appeals (OTA) may decline to apply a tax regulation in a taxpayer appeal if it conflicts with the relevant statute. OTA must afford appropriate deference to the issuing agency, but its authority extends to setting aside the regulation for that appeal. OTA lacks authority to invalidate or repeal the regulation more broadly or to apply its conclusions outside the specific appeal.

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Senate Bill 711 (S.B. 711) would update California’s conformity date to the Internal Revenue Code (IRC) from January 1, 2015, to January 1, 2025. If enacted, this change would apply to taxable years beginning on or after January 1, 2025, and would align California tax law with numerous federal provisions enacted over the past decade. Notable provisions include:

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On January 10, 2025, California Governor Gavin Newsom released his January Budget Proposal for the 2025 – 2026 fiscal year. Notably, Governor Newsom’s budget would increase tax revenue by requiring banks and financial corporations to move from an equally weighted three-factor formula, comprising property, payroll and sales factors, to a single-sales-factor formula for purposes of apportioning income to the state. Agricultural and extractive businesses would continue to use the three-factor formula. The proposed change would take effect immediately, beginning with tax year 2025. Continue Reading ›