California extends hiring tax credit through 2031

Personal Income Tax Law: Corporation Tax Law: New Employment Credit.

Introduced· 2026-02-19

Who's it for

Who's it for: Businesses

What it means for you

5/10Mixed

Mixed: some good, some bad ·

Cost shift

Draft summary, still being checked against the official bill text. Read the source to confirm.

If passed, businesses that hire full‑time workers in certain low‑income areas could claim a tax credit, which may lead to more local jobs but costs taxpayers.

Our take

What we think, in plain words.

The bill would let companies lower their state tax bill by up to 35% of qualifying wages, encouraging them to hire in poor neighborhoods. Taxpayers will fund the credit, so the state loses revenue that could be used for schools or services. Supporters say it will create jobs; opponents say it gives a handout to businesses.

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The facts

What the bill actually says, no spin.

Extends employment tax credit to taxable years starting before Jan 1, 2031.
Credit equals 35% of qualified wages above 150% of minimum wage up to 350%.
Applies to businesses hiring full‑time workers in designated census tracts or economic development areas.
Small businesses are exempt from the relocation requirement.
Repeal date pushed from Dec 1, 2029 to Dec 1, 2034.
Takes effect immediately as a tax levy.