The Senate Revenue and Taxation Committee approved legislation March 26 that would incentivize the development of clean energy in California.
In 2022, as part of the Inflation Reduction Act, the federal government established various tax credits for clean energy producers and authorized taxpayers to transfer and sell these credits. Transfers and sales of the credits are not included in a taxpayer’s gross income for federal purposes, but California has not conformed to these changes and remains one of five states that tax the transfer and sale of credits.
CalTax-supported SB 302, by Senator Stephen Padilla, would conform California law to federal law regarding the transferability and treatment of environmental tax credits.
Alex Jackson, a representative of the American Clean Power Association, told the committee that California’s tax “is preventing developers from fully utilizing that benefit to bring down project costs, save ratepayers money, and help address California’s affordability challenges.”
A coalition letter submitted by CalTax noted that the legislation would encourage businesses to invest in clean energy development in California.
“A majority of states have conformed to the federal rules regarding the non-taxability of transferred or sold environmental credits, making California’s tax code particularly punitive to clean energy businesses,” CalTax wrote. “SB 302 would remove roadblocks to the state’s energy transition, improve energy affordability in California, and align California’s tax treatment of environmental credits with the federal government and that of a majority of other states.”
SB 302 received bipartisan support, passing with a 5-0 vote. The bill now goes to the Senate Appropriations Committee.
The committee took up two additional bills during the hearing and unanimously approved those, too:
- SB 86, by Senator Jerry McNerney, who chairs the committee, would indefinitely extend the California Alternative Energy and Advanced Transportation Financing Authority Act (a sales and use tax exclusion for California-based manufacturing and green energy projects), increase the maximum aggregate exclusion amount to $300 million per calendar year, and add electrical generation facilities using nuclear fusion technology to the types of projects that qualify for the exclusion. SB 86 has received widespread support from California’s business community.
- SB 296, by Senator Bob Archuleta, would provide a full property tax exemption for veterans who are 100 percent disabled.
The committee’s next meeting is scheduled for April 9.