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California Governor Signs Bill Exempting Some COVID-19 Grants

Posted on Sep. 28, 2021

California Gov. Gavin Newsom (D) has signed a budget trailer bill that provides corporate and individual tax exemptions for some COVID-19 relief grant programs.

A.B. 176 was signed September 23, along with other bills implementing California's fiscal 2021 budget. The bill implements a corporate income tax exemption for grants received through the California Microbusiness COVID-19 Relief Grant Program for tax years beginning on or after September 1, 2020, and ending before January 1, 2023. According to a Senate Budget and Fiscal Review Committee analysis of the bill, a personal income tax exemption was already allowed for grants made through the program. The bill also implements a personal income tax exemption for grants made through the California Venues Grant Program for tax years beginning on or after September 1, 2020, and ending before January 1, 2023. 

Both grant programs were established by S.B. 151, another piece of the budget that was signed by Newsom in July. The microbusiness relief program provides up to $2,500 to businesses that had less than $50,000 in revenue in the 2019 tax year and were significantly affected by COVID-19. The venues program provides grants of up to $250,000 to venues that host live events and that experienced at least a 70 percent drop in revenue between three quarters in 2019 and those same quarters in 2020.

A.B. 176 also cleans up a few existing tax provisions and provides some minor technical changes, including clarifying the applicable sales tax paid by used vehicle dealers and the homeless hiring tax credit certification process. It also specifies that the California Film Commission is the agency responsible for adopting regulations for the state’s film tax credit, which was expanded under S.B. 144 in July.

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