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Bill

AB 856

Sales and Use Tax: exemptions: manufacturing.

2025-2026 Regular Session Introduced by Phillip Chen

AB 856 creates manufacturing sales and use tax exemptions in California to reduce production costs and potentially boost business investment in the state.

In committee: Set, first hearing. Hearing canceled at the request of author.
#salesandusetax #exemptions #manufacturing
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Bill Summary · AB 856

Legislative bill overview

AB 856 would create or modify sales and use tax exemptions specifically for manufacturing activities in California. The bill was introduced by Assemblymember Phillip Chen and is currently in the Revenue and Taxation Committee, though a scheduled hearing was canceled by the author in April 2025.

Why is this important

Manufacturing tax exemptions directly affect business operating costs and can influence investment decisions about where companies locate production facilities. California's competitiveness in retaining and attracting manufacturing depends partly on its tax structure relative to other states.

Potential points of contention

  • Fiscal impact: Tax exemptions reduce state revenue; the bill's cost to the General Fund and whether it's offset elsewhere remains unclear from available information
  • Scope definition: What qualifies as "manufacturing" for exemption purposes could be broadly or narrowly interpreted, affecting which industries benefit
  • Equity concerns: Targeted tax breaks for one industry sector raise questions about whether other sectors (agriculture, technology, services) receive comparable treatment or whether this creates unfair advantages

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

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