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, 2016, and before January 1,begin delete 2021,end deletebegin insert 2019,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.begin insert The bill would also require the amount of the credit to be multiplied by
the tax credit adjustment factor, as specified.end insert 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 thebegin delete 119-year longend deletebegin insert 119-year-longend insert statewide
5precipitation record.
6(b) Temperatures in the first nine months of 2014 were a
7record-breaking 4.1 degrees above the 20th century average across
8the state.
9(c) Responding to these
unprecedented dry and hot conditions,
10the United States Drought Monitor classified more than 80 percent
11of California in an “extreme” drought condition, with 58 percent
12of California in an “exceptional” drought, the highest condition.
13(d) On January 17, 2014, the Governor called upon retail water
14providers throughout California to reduce residential per capita
15water use by 20 percent as compared to 2013 levels.
16(e) Outdoor water use accounts for the highest percentage of
17regional water use.
18(f) Landscape design, installation, maintenance, and
19management can and should be water efficient. The use of
20water-efficient landscapes contributes to the state’s efforts to
21increase the reliability of its water supplies.
22(g) Californians can achievebegin delete water efficientend deletebegin insert water-efficientend insert
23 landscapes by installing a combination of drought-tolerant live
24plants; warm season turf varieties, which require 25 percent less
25water compared to cool season turf; soaker or drip-irrigation hoses;
26a moisture control for a sprinkler or irrigation system; mulch and
27soil; a rain barrel or an alternative rain and moisture collection
28system; a permeable ground cover surface that allows water to
29reach underground basins, aquifers, or water collection points;
30plant and grass seeds coated with a water-saving surfactant; and
31abegin delete water savingend deletebegin insert
water-savingend insert surfactant.
32(h) Municipalities and local water agencies are tasked with
33enforcing water conservation ordinances to eliminate water waste
34and restrict outdoor water use.
P3 1(i) It is the intent of the Legislature to provide an income tax
2credit for the purchase of outdoor water use efficiency
3improvements during the exceptional drought that California is
4facing.
Section 17053.37 is added to the Revenue and Taxation
6Code, to read:
(a) For each taxable year beginning on or after
8January 1, 2016, and before January 1,begin delete 2021,end deletebegin insert 2019,end insert there shall be
9allowed as a credit against the “net tax,” as defined in Section
1017039, an amount equal to 25 percent of the amount paid or
11incurred during the taxable year by a qualified taxpayer for
12water-efficiency improvements for outdoor landscapes on qualified
13real property in this state.
14(b) For each qualified real property, the credit allowed under
15this section shall not cumulatively exceed two
thousand five
16hundred dollars ($2,500) for all taxable years.
17
(c) (1) The amount of the credit under this section shall be
18multiplied by the tax credit adjustment factor for the taxable year.
19
(2) Unless otherwise specified in any budget measure, the tax
20credit adjustment factor for a taxable year beginning on or after
21January 1, 2016, shall be 0 percent.
22
(3) The tax credit authorized by
this section shall only be
23operative for taxable years for which resources are authorized in
24any budget measure for the Franchise Tax Board to oversee and
25audit returns associated with the credit.
15 26(c)
end delete
27begin insert(d)end insert For the purposes of this section, the following definitions
28shall apply:
29(1) “Qualified real property” means a principal residence of the
30qualified taxpayer, within the meaning of Section 121 of the
31Internal Revenue Code, relating to exclusion of gain from sale of
32principal residence, in this state.
33(2) “Qualified taxpayer” means the owner of any qualified real
34
begin delete property.end deletebegin insert property whose income does not exceed 120 percent of
35the area median income of the county in which he or she resides.end insert
36(3) (A) “Water-efficiency improvements” means expenditures
37voluntarily paid or incurred by the qualified taxpayer that are
38certified by the appropriate regional or local water agency as
39water-efficient improvements compatible with any of the following:
P4 1(i) A local water-efficient landscape ordinance of a regional or
2local water agency adopted or in
effect at the time the
3improvements are made.
4(ii) The state water-efficient landscape statutes adopted or in
5effect at the time the improvements are made.
6(iii) A water-efficient landscape program that is developed and
7implemented by a regional or local water agency for the specific
8purpose of reducing water use.
9(B) “Water-efficiency improvements” do not include
10improvements performed to bring landscaping into mandatory
11compliance with a local water-efficient landscape ordinance or
12state law.
39 13(d)
end delete14begin insert(e)end insert A qualified taxpayer shall:
15(1) Obtain certification of the water-efficiency improvements
16from the appropriate regional or local water agency specified in
17paragraph (3) of subdivisionbegin delete (c)end deletebegin insert (d)end insert after completion of those
18improvements.
19(2) Retain a copy of the certification specified in paragraph (1)
20and, upon request, provide a copy of that certification to the
21Franchise Tax Board.
8 22(e)
end delete
23begin insert(f)end insert This credit shall be in lieu of any other credit or deduction
24that the qualified taxpayer may otherwise claim pursuant to this
25part with respect to the amounts paid or incurred for
26water-efficiency improvements for outdoor landscapes on qualified
27real property in this state.
13 28(f)
end delete
29begin insert(g)end insert In the case where the credit allowed under this section
30exceeds the “net tax,” as defined by Section 17039, for a taxable
31year, the excess credit may be carried over to reduce the “net tax”
32in the following taxable year, and succeeding three taxable years,
33if necessary, until the credit has been
exhausted.
18 34(g)
end delete
35begin insert(h)end insert Section 41 does not apply to the credit allowed by this
36section.
20 37(h)
end delete
38begin insert(i)end insert This section shall remain in effect until December 1,begin delete
2021,end delete
39begin insert 2019,end insert and as of that date is repealed.
This act provides for a tax levy within the meaning
2of Article IV of the Constitution and shall go into immediate effect.
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