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Overview

Latest information on upcoming tax form changes.

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2025

Legislative Changes

Significant chaptered California legislation that require tax form changes. This is not an all-inclusive list.

  • SB 132 (2025-2026) – Taxation Budget Trailer Bill
    • Single Sales Factor Apportionment for Financial Institutions – For taxable years beginning on or after January 1, 2025, California law removes savings and loan and banking or financial business activities from the definition of qualified business activities for purposes of apportionment.
    • Elective Tax for Pass-Through Entities and Credit for Qualified Taxpayers Extended – For taxable years beginning on or after January 1, 2026, and before January 1, 2031, the pass-through entity (PTE) elective tax and credit for qualified taxpayers is extended. For taxable years beginning on or after January 1, 2026, qualified PTEs that do not make the required June 15 prepayment or make a prepayment less than the amount due can still make the election, however, the amount of credit allowed to the qualified taxpayer is reduced by 12.5% of the qualified taxpayer’s pro rata share of the unpaid amount due.
    • Wildfire Disaster Settlement Exclusion – For taxable years beginning on or after January 1, 2021, and before January 1, 2030, California law allows a qualified taxpayer an exclusion from gross income for any qualified amount received from a settlement entity in connection with a qualified wildfire disaster in California (incorporates SB 159). If a qualified taxpayer included income for a qualified amount received from a settlement entity in a prior taxable year, the taxpayer can file an amended return for that year within the normal statute of limitations. We revised the 2021-2024 Publication 1001, Supplemental Guidelines to California Adjustments.
    • Chiquita Canyon Elevated Temperature Landfill Event Exclusion – For taxable years beginning on or after January 1, 2024, and before January 1, 2029, California law allows an exclusion from gross income for any Chiquita Canyon elevated temperature landfill event payment amount received by a taxpayer. If a taxpayer included income for a Chiquita Canyon elevated temperature landfill event payment amount received in a prior taxable year, the taxpayer can file an amended return for that year within the normal statute of limitations. We revised the 2024 Publication 1001.
  • SB 132 (2023-2024) – Program 4.0 California Motion Picture and Television Production Credit

    For taxable years beginning on or after January 1, 2025, California Revenue and Taxation Code (R&TC) Sections 17053.98.1 and 23698.1 allow a new film credit, Program 4.0, against tax. The credit is allocated and certified by the California Film Commission (CFC). The qualified taxpayer can:

    • Offset the credit against income tax liability.
    • Sell the credit to an unrelated party (independent films only).
    • Assign the credit to an affiliated corporation.
    • Apply the credit against qualified sales and use taxes.

    In addition, R&TC Sections 17053.98.1 and 23698.1 allow a qualified taxpayer to make a one-time irrevocable election to receive a refundable tax credit if the amount allowable as a credit under Program 4.0 exceeds the qualified taxpayer’s tax liability for the taxable year.

    A qualified taxpayer cannot be a pass-through entity. The credit is passed through to the shareholders, partners, or members only.

    For more information, go to ftb.ca.gov and search for motion picture, or go to the CFC website at film.ca.gov.

    As a result of this legislative change, we reformatted form FTB 3541 and added a new line “Refundable Program 4.0 California Motion Picture and Television Production Credit” to the payment section of Forms 540, 540NR, 100, 100W, 100X, 541, and 109.

Federal Tax Forms Changes that Impact California Tax Forms

The Internal Revenue Service (IRS) made changes to federal forms that require changes to California tax forms.

  • The 2024 draft of federal Form 1120-S, Schedule K, line 12a Charitable contributions was expanded to two lines, Line 12a Cash charitable contributions and Line 12b Noncash charitable contributions. We updated the 2025 Form 100S, Schedule K and 2025 Schedule K-1 (Form 100S) to reflect this change.

Other Form Changes

Other notable form changes.

The 2025 Form FTB 4197 Instructions have been updated by removing the following tax expenditures:

  • Paycheck Protection Program (PPP)
  • Other Loan Forgiveness (OLF)
  • Economic Injury Disaster Loan (EIDL)
  • Restaurant Revitalization Grant (RRG)
  • Shuttered Venue Operator Grant (SVOG)

Beginning in taxable year 2024, FTB is no longer required to report on the specified tax expenditures listed above. Accordingly, taxpayers do not need to file form FTB 4197 to report these items. If the taxpayer already reported these items on form FTB 4197 on their 2024 tax year return, they do not need to amend their tax return.

2024

New Forms

  • FTB 3870, Election for Refundable Credit
  • FTB 3872, California Disaster Relief Request for Postponement of Tax Deadlines

Legislative Changes

Significant chaptered California legislation that require tax form changes. This is not an all-inclusive list.

  • SB 951 – State Disability Insurance

    For taxable years beginning on or after January 1, 2024, California law removes the taxable wage limit and maximum withholdings for each employee subject to State Disability Insurance (SDI) contributions. All wages are taxable for the purpose of computing SDI worker contributions. As a result, the Excess SDI (or VPDI) withheld line will be removed from the personal income tax return by updating the line as “reserved for future use”. For more information, visit the Employment Development Department (EDD) website at edd.ca.gov.

  • SB 167 (all bullets below)/SB 175 (credit limitation only)

    • Credit Limitation – For taxable years beginning on or after January 1, 2024, and before January 1, 2027, there is a $5,000,000 limitation on the application of business credits. The total of all business credits including the carryover of any credit for the taxable year may not reduce the “net tax” for personal income tax filers, or “tax”, for corporate filers, by more than $5,000,000. This limitation does not apply to the Low-Income Housing Credit. The credit for prior year AMT is not subject to the credit limitation. Business credits should be applied against “net tax” before other credits.

      For each taxable year of the limitation, taxpayers may make an irrevocable election to receive an annual refundable credit amount, in future tax years, for business credits disallowed due to the $5,000,000 limitation. The election must be made annually by completing form FTB 3870, Election for Refundable Credit and attaching it to an original, timely filed tax return.

      If a taxpayer does not choose to make the election outlined above, business credits disallowed due to the limitation may be carried over. The carryover period for disallowed credits is extended by the number of taxable years the credit was not allowed.

    • Enhanced Oil Recovery Credit Repeal – For taxable years beginning on or after January 1, 2024, the Enhanced Oil Recovery Credit has been repealed. Taxpayers may now only claim available carryovers. Form FTB 3546 has been obsolesced.
    • Intangible Drilling and Development Costs – For personal income tax purposes, California law does not allow the Internal Revenue Code (IRC) Section 263(c) deduction for intangible drilling and development costs in the case of oil and gas wells paid or incurred on or after January 1, 2024. For corporation income tax purposes, R&TC Section 24423 has been repealed.
    • Net Operating Loss Suspension – For taxable years beginning on or after January 1, 2024, and before January 1, 2027, California has suspended the net operating loss (NOL) carryover deduction. Taxpayers may continue to compute and carryover an NOL during the suspension period. However, personal income tax filers with net business income or modified adjusted gross income of less than $1,000,000 or with disaster loss carryovers are not affected by the NOL suspension rules. Also, corporate filers with taxable income of less than $1,000,000 or with disaster loss carryovers are not affected by the NOL suspension rules. The carryover period for suspended losses is extended by:
      • 3 years for losses incurred in taxable years beginning before January 1, 2024.
      • 2 years for losses incurred in taxable years beginning on or after January 1, 2024, and before January 1, 2025.
      • 1 year for losses incurred in taxable years beginning on or after January 1, 2025, and before January 1, 2026.
    • Percentage Depletion – For taxable years beginning on or after January 1, 2024, California law does not allow the calculation of depletion as a percentage of gross income from the property for specified natural resources, including coal, oil shale, oil and gas wells. R&TC Sections 17681.3, 17681.6, 24831.3, and 24831.6 allowing state nonconformity to federal rules for percentage depletion of certain refiner exclusions as well as the temporary suspension of taxable income limit for marginal production have also been repealed.
    • Postponement of Certain Tax-Related Deadlines – Beginning on or after June 27, 2024, the Director of Finance shall determine when Internal Revenue Code Section 7508A, related to postponement of certain federal tax-related deadlines, applies for California purposes to a taxpayer affected by a state of emergency declared by the Governor or a federally declared disaster. Impacted taxpayers can request an additional relief period if the state postponement period expires before the federal postponement period by filing form FTB 3872, California Disaster Relief Request for Postponement of Tax Deadlines.
    • New Advanced Strategic Aircraft Credit – The sunset date for the New Advanced Strategic Aircraft Credit to reduce tax below the tentative minimum tax is extended until taxable years beginning before January 1, 2031.
  • SB 946 – Wildfire Mitigation Payment

    For taxable years beginning on or after January 1, 2024, and before January 1, 2029, California law allows a qualified taxpayer an exclusion from gross income for any amount received as a California qualified wildfire loss mitigation payment through the California Wildfire Mitigation Financial Assistance Program.

Federal Tax Forms Changes that Impact California Tax Forms

The Internal Revenue Service (IRS) made changes to federal forms that require changes to California tax forms.

  • The 2024 draft of federal Schedule K-1 (1120-S) added new questions, F2 and F3. We updated Schedule K-1 (100S) to add a similar question.
  • The 2024 draft of federal Form 1040, Schedule 1 added a new line 8v. We updated Schedule CA (540 and 540NR) to mirror the new line.

2023

New Forms

  • FTB 3820, High-Road Cannabis Tax Credit (AB 195)

    For taxable years beginning on or after January 1, 2023, and before January 1, 2028, the High-Road Cannabis Tax Credit (HRCTC) will be available to licensed commercial cannabis businesses that meet the qualifications. The credit is allowed to a qualified taxpayer in an amount equal to 25% of qualified expenditures in the taxable year. The credit amount cannot exceed $250,000. Unused credit may be carried forward up to eight years. All types of entities, except for exempt organizations, are eligible to claim this credit.

    A qualified taxpayer must request a tentative credit reservation from the Franchise Tax Board (FTB) during the month of July for each taxable year or within 30 days of the start of their taxable year if the qualified taxpayer’s taxable year begins from August 1st through December 31st. For more information, visit ftb.ca.gov and search for hrctc.

  • FTB 3821, Cannabis Equity Tax Credit(AB 195)

    For taxable years beginning on or after January 1, 2023, and before January 1, 2028, a Cannabis Equity Tax Credit (CETC) is available to equity licensees that have received approval, including approval contingent upon the availability of funds, for the fee waiver and deferral program administered by the Department of Cannabis Control (DCC). The allowable credit is $10,000 per taxable year for each qualified taxpayer. Unused credit may be carried forward up to eight years. All types of entities, except for exempt organizations, are eligible to claim this credit. For more information, visit ftb.ca.gov and search for cetc.

Legislative Changes

Significant chaptered California legislation that require tax form changes. This is not an all-inclusive list.

  • SB 131 – Kincade and Zogg Wildfires, New Employment Credit Expansion, and Incomplete Gift Non-Grantor ING Trusts:
    • Kincade and Zogg Wildfires – For taxable years beginning on or after January 1, 2020, and before January 1, 2028, California allows a qualified taxpayer an exclusion from gross income for any qualified amount received in a settlement from Pacific Gas & Electric Company or its subsidiary relating to the 2019 Kincade Fire or the 2020 Zogg Fire. If a qualified taxpayer included income for a qualified amount received from these settlements in a prior taxable year, the taxpayer can file an amended return for that year within the normal statute of limitations. We revised the 2022 Publication 1001.
    • New Employment Credit Expansion – For taxable years beginning on or after January 1, 2023, and before January 1, 2026, the New Employment Credit is expanded for qualified taxpayers engaged in semiconductor manufacturing or semiconductor research and development, lithium production, manufacturing of lithium batteries, or electric airplane manufacturing.
    • Incomplete Gift Non-Grantor ING Trusts – For taxable years beginning on or after January 1, 2023, the income of an incomplete gift non-grantor ING trust shall be included in a qualified taxpayer’s gross income as if it were a grantor trust under R&TC Section 17731. The income of an ING Trust for a taxable year shall not be included in a qualified taxpayer’s gross income if an irrevocable election is timely filed in the form and manner prescribed by the FTB, and the requirements of R&TC Section 17082 are met. The ING Trust income is reported on the grantor’s income tax return.

      On Form 541, under “Type of entity,” we added two checkbox items to the list, “(11) – ING trust” and “(12) – ING trust w/ election.” Also, we added another checkbox item “(13) – Qualified disability trust” to resolve a long-standing processing issue not related to ING trusts.

  • SB 132 – Program 3.0 California Motion Picture and Television Production Credit and Sound Stage Filming Tax Credit:
    • Program 3.0 California Motion Picture and Television Production Credit – For taxable years beginning on or after January 1, 2020, California law allows the Program 3.0 California Motion Picture and Television Production Credit to reduce tax below tentative minimum tax.
    • Soundstage Filming Tax Credit – For taxable years beginning on or after January 1, 2022, California law allows the Soundstage Filming Tax Credit to reduce tax below tentative minimum tax.

    We revised the 2022 Schedule P’s (540, 540NR, 100, 100W, and 541) for the above changes. We also revised the prior years 2020 and 2021 Schedule P’s for the Program 3.0 California Motion Picture and Television Production Credit.

Federal Tax Forms Changes that Impact California Tax Forms

The Internal Revenue Service (IRS) made changes to federal forms that require changes to California tax forms.

  • The 2023 IRS draft of federal Form 1065, Schedule K, line 13a Contributions was expanded to two lines, Line 13a Cash contributions and Line 13b Noncash contributions. We updated the Schedule K (565 and 568) and Schedule K-1 (565 and 568) to reflect this change.
  • The 2023 IRS draft of federal Schedule K-1 (1065) modified Part II, Item J. This question is being modified to add a separate checkbox for both “Sale” and “Exchange”. We updated the existing question on Schedule K-1 (565 and 568) to reflect this change.
  • The 2023 IRS draft of federal Schedule K-1 (1065) added a new question, Item K3. We updated Schedule K-1 (565 and 568) to add this new question.

Other Form Changes

Other notable form changes.

  • e-file Form 109 – For taxable years beginning on or after January 1, 2023, the Franchise Tax Board (FTB) offers e-file for exempt organizations filing Form 109, California Exempt Organization Business Income Tax Return. Check with your software provider to see if they support exempt organization e-file.
Last updated: 10/01/2025