Governor Newsom Signs Budget Act of 2022
On June 30, 2022, California Governor Gavin Newsom signed a $308 billion budget package (Budget Act of 2022), which includes a direct tax refund for qualifying taxpayers. We have outlined some of the key tax related highlights from the budget, below. We will continue to keep you updated as we learn more about how the provisions in the budget may affect you or your business.
Individuals
- Better for Families Tax Rebate – a tax rebate for inflation relief, for people who timely filed a 2020 tax return based on filing status and annual income. The Franchise Tax Board plans to begin issuing these payments in late October.
- Single filers earning up to $75,000 ($150,000 for joint filers) will be eligible for a $350 rebate per taxpayer, plus an additional $350 if they claim at least one dependent (maximum of $1,050 per household)
- Single filers earning between $75,000 and $125,000 (between $150,000 and $250,000 for joint filers) will be eligible for a $250 rebate per taxpayer, plus an additional $250 if they claim at least one dependent (maximum of $750 per household)
- Single filers earning between $125,000 and $250,000 (between $250,000 and $500,000 for joint filers) will be eligible for a $200 rebate per taxpayer, plus an additional $200 if they claim at least one dependent (maximum of $600 per household)
- Homeownership – the budget provides $500 million to establish the California Dream For All Program to assist first time homebuyers with their purchase. First time homebuyers will be able to purchase a home with a lower down payment and reduced monthly mortgage payments through a shared appreciation agreement with the state.
- Penalties – establishes a one time late-filing penalty abatement program effective for tax years beginning on or after January 1, 2022.
Business and Nonprofits
- Paycheck Protection Program (PPP) – adopts conformity of state tax law (AB 80) to all PPP loan recipients. PPP loans granted after March 31, 2021 are now subject to the same provisions as prior loans. Loan forgiveness is non-taxable and expenses paid with loan proceeds are deductible if the borrower had the required decline in gross receipts.
- Supplemental paid sick leave grants – The budget includes $250 million for relief grants for small businesses and nonprofits with up to 150 employees to offset costs of their employees who utilized the state’s mandated 2022 (COVID) Supplemental Paid Sick Leave program (SB 114).
- The budget continues supporting COVID-19 Relief Grant Programs including:
- California Nonprofit Performing Arts program
- California Venues Grant program
- California Microbusinesses
- Cultural Institutions
It also adds funding to the California Small Business COVID-19 Relief Program.
The Full Budget Summary can be found here: California State Budget 2022-2023.
As always, if you have any questions about how the budget may affect you or your business, please contact us.