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AB 1435

Personal Income Tax Law: Corporation Tax Law: credits: cleanup costs.

2025-2026 Regular Session Introduced by Stephanie Nguyen

Creates a temporary nonrefundable tax credit up to $20,000 per year for one-time cleanup costs from unauthorized encampments, illegal dumping, or abandoned property on commercial r

From committee: Without further action pursuant to Joint Rule 62(a).
#corporationtaxlaw #personalincometaxlaw #cleanupcosts #credits
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WeVote Research Nonpartisan
Bill Summary · AB 1435

AB 1435 — Summary (Nguyen)

Personal Income Tax Law & Corporation Tax Law: tax credit for cleanup costs related to unauthorized encampments, illegal dumping, and abandoned property

Purpose

AB 1435 would create a temporary tax credit to help businesses offset one-time cleanup costs incurred when unauthorized encampments, illegal dumping, or abandoned property occur on commercial real property. The bill frames the credit as targeted relief beyond ordinary business deductions to lessen the financial burden on property owners and lessees.

Key provisions

  • Effective period: taxable years beginning on or after January 1, 2026 and before January 1, 2031.
  • Credit allowance: a nonrefundable credit (applied against “net tax”) equal to qualified cleanup expenditures paid or incurred during the taxable year, capped at $20,000 per qualified taxpayer per taxable year.
  • Coordination with deductions: any deduction otherwise allowed for amounts on which the credit is claimed must be reduced by the credit amount (bill text truncated but indicates deduction coordination).
  • Applies under both the Personal Income Tax Law and Corporation Tax Law (individuals, including sole proprietors, and business entities).

Definitions & eligible costs

  • “Qualified cleanup expenditures” are one-time costs directly related to removal and disposal of unauthorized encampments, illegal dumping, and abandoned property, paid or incurred within 60 days of discovery.
  • Examples of qualifying costs:
    • Waste removal and disposal services
    • Sanitization and restoration to pre-encampment condition
    • Temporary, nonpermanent security measures directly related to cleanup (temporary fencing, temporary gates; ongoing contracts or permanent surveillance do not qualify)
    • Repairs for damage caused by encampments or illegal dumping (excluding capital improvements)
    • Installation of passive, nonpermanent deterrents to prevent reencampment (not permanent construction)
  • Explicit exclusions: ongoing maintenance, permanent security systems, new structures, capital improvements, and compensation to the taxpayer’s regular employees or to contractors for services in the normal course of employment or lease obligations.

Eligibility, documentation & enforcement

  • “Qualified taxpayer”: business entity (including sole proprietor) owning or leasing commercial real property in California affected by the described activities.
  • Recordkeeping: upon FTB request, taxpayers must provide evidence of property condition prior to cleanup and detailed invoices/receipts from service providers.
  • Certification: taxpayers must certify under penalty of perjury that expenses qualify, identify the property address and owner/lessee status, and attest the event was not caused or contributed to by the taxpayer or related parties. The bill’s perjury certification language expands the scope of the perjury offense, which the bill notes creates a state-mandated local program.
  • Administrative rules: the Franchise Tax Board (FTB) may issue rules and regulations (including emergency regulations not subject to Office of Administrative Law review) to implement the credit and prevent improper claims.

Fiscal/legal notes & procedural status

  • Fiscal metadata on the bill: Majority vote, fiscal committee review required, no appropriation; local program mandated (per bill language).
  • The bill states no state reimbursement is required under the state-mandated local costs statutes for a specified reason.
  • Legislative status (select actions): Introduced Feb 21, 2025; referred to Assembly Revenue & Taxation; amended and re-referred; hearings held/held under submission in April–May 2025. On June 5, 2025, the bill was reported “From committee: Without further action pursuant to Joint Rule 62(a)” (i.e., not advanced out of committee under that rule).

Potential impacts

  • Direct benefit to commercial property owners/lessees incurring one-time cleanup costs (up to $20,000 annually).
  • Potential state revenue loss from the new tax credit (not quantified in bill summary).
  • Administrative and compliance workload for FTB to implement rules, audit claims, and process certifications; expands perjury exposure for false claims.

Compiled from official sources — confirm details with the bill’s official record.

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