AB 2040, as amended, Melendez. Outdoor Water Efficiency Act of 2016: personal income tax credits: outdoor water efficiency.
The Personal Income Tax Law allows various credits against the taxes imposed by that law.
This bill, for taxable years beginning on or after January 1,begin delete 2017,end deletebegin insert 2016,end insert and before January 1,begin delete 2022,end deletebegin insert 2021,end insert would allow a credit equal to 25% of the amount paid or incurred by a qualified taxpayer for water-efficiency improvements, as defined, on qualified real property in this state, as specified. The bill would limit the cumulative amount of the credit to $2,500 for each
qualified real property for all taxable years. The bill would require a qualified taxpayer to obtain and retain a certification of the water-efficiency improvements from the appropriate regional or local water agency after completion of the improvements and to provide a copy of this certification to the Franchise Tax Board upon request.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the
2following:
3(a) The 2014 water year, ending on September 30, was the third
4driest based on the 119-year long statewide precipitation record.
5(b) Temperatures in the first nine months of 2014 were a
6record-breaking 4.1 degrees above the 20th century average across
7the state.
8(c) Responding to these unprecedented dry and hot conditions,
9the United States Drought Monitor classified more than 80 percent
10of California in an “extreme” drought condition, with 58 percent
11of California
in an “exceptional” drought, the highest condition.
12(d) On January 17, 2014, the Governor called upon retail water
13providers throughout California to reduce residential per capita
14water use by 20 percent as compared to 2013 levels.
15(e) Outdoor water use accounts for the highest percentage of
16regional water use.
17(f) Landscape design, installation, maintenance, and
18management can and should be water efficient. The use of
19water-efficient landscapes contributes to the state’s efforts to
20increase the reliability of its water supplies.
21
(g) Californians can achieve water efficient landscapes by
22installing a
combination of drought-tolerant live plants; warm
23season turf varieties, which require 25 percent less water compared
24to cool season turf; soaker or drip-irrigation hoses; a moisture
25control for a sprinkler or irrigation system; mulch and soil; a rain
26barrel or an alternative rain and moisture collection system; a
27permeable ground cover surface that allows water to reach
28underground basins, aquifers, or water collection points; plant
29and grass seeds coated with a water-saving surfactant; and a water
30saving surfactant.
31(g)
end delete
32begin insert(h)end insert Municipalities and local water agencies are tasked with
33enforcing water conservation ordinances to
eliminate water waste
34and restrict outdoor water use.
35(h)
end delete
36begin insert(i)end insert It is the intent of the Legislature to provide an income tax
37credit for the purchase of outdoor water use efficiency
P3 1improvements during the exceptional drought that California is
2facing.
Section 17053.37 is added to the Revenue and Taxation
4Code, to read:
(a) For each taxable year beginning on or after
6January 1,begin delete 2017,end deletebegin insert 2016,end insert and before January 1,begin delete 2022,end deletebegin insert 2021,end insert there
7shall be allowed as a credit against the “net tax,” as defined in
8Section 17039, an amount equal to 25 percent of the amount paid
9or incurred during the taxable year by a qualified taxpayer for
10water-efficiency improvements for outdoor landscapes on qualified
11real property in
this state.
12(b) For each qualified real property, the credit allowed under
13this section shall not cumulatively exceed two thousand five
14hundred dollars ($2,500) for all taxable years.
15(c) For the purposes of this section, the following definitions
16shall apply:
17(1) “Qualified real property” means a principal residence of the
18qualified taxpayer, within the meaning of Section 121 of the
19Internal Revenue Code, relating to exclusion of gain from sale of
20principal residence, in this state.
21(2) “Qualified taxpayer” means the owner of any qualified real
22property.
23(3) (A) “Water-efficiency improvements” means expenditures
24voluntarily paid or incurred by the qualified taxpayer that are
25certified by the appropriate regional or local water agency as
26water-efficient improvements compatible with any of the following:
27(i) A local water-efficient landscape ordinance of a regional or
28local water agency adopted or in effect at the time the
29improvements are made.
30(ii) The state water-efficient landscape statutes adopted or in
31effect at the time the improvements are made.
32(iii) A water-efficient landscape program that is developed and
33implemented by a regional or local water agency for the specific
34purpose of reducing water use.
35(B) “Water-efficiency improvements” do not include
36improvements performed to bring landscaping into mandatory
37compliance with a local water-efficient landscape ordinance or
38state law.
39(d) A qualified taxpayer shall:
P4 1(1) Obtain certification of the water-efficiency improvements
2from the appropriate regional or local water agency specified in
3paragraph (3) of subdivision (c) after completion of those
4improvements.
5(2) Retain a copy of the certification specified in paragraph (1)
6and, upon request, provide a copy of that certification to the
7Franchise Tax Board.
8(e) This credit shall be in lieu of any other credit or deduction
9that the
qualified taxpayer may otherwise claim pursuant to this
10part with respect to the amounts paid or incurred for
11water-efficiency improvements for outdoor landscapes on qualified
12real property in this state.
13(f) In the case where the credit allowed under this section
14exceeds the “net tax,” as defined by Section 17039, for a taxable
15year, the excess credit may be carried over to reduce the “net tax”
16in the following taxable year, and succeeding three taxable years,
17if necessary, until the credit has been exhausted.
18(g) Section 41 does not apply to the credit allowed by this
19section.
20(h) This section shall remain in effect until December 1,begin delete 2022,end delete
21begin insert
2021,end insert and as of that date is repealed.
This act provides for a tax levy within the meaning
23of Article IV of the Constitution and shall go into immediate effect.
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