Overview of 2026 Budget-related Bills

Based upon the status of bills that were made public by Friday night, the following is a summary of those measures that are likely to be voted on Monday by the California Legislature:

AB 109 (Gabriel) / SB 109 (Laird)

Budget Bill

Majority vote budget bill

SB 110 (Laird)

Adds listing of budget-related bills

Majority vote budget bill junior

AB 122 (Budget Cmte) / SB 122 (Budget Cmte)

Taxation Trailer Bill

SAAS – software as a service – would redefine tangible personal property to include digital products effective 1/1/27 and subject them to sales/use tax.

Would extend from 1/1/27 to 1/1/30 the current $5 million cap on the use of all business tax credits, as well as refundable amounts provisions.

Effective 1/1/30, the limit on all business tax credits would be 70% or $5 million, whichever is greater.

From 1/1/27 to 1/1/30, the $800 minimum franchise tax for LPs, LLPs, and LLCs would be $400.

From 1/1/26 to 1/1/30, any payment from the federal Anti-Weaponization Fund would be taxed at a rate of 100%.

2/3 vote due to tax increases

AB 125 (Budget Cmte) / SB 125 (Budget Cmte)

MCO Provider Tax

Would impose an MCO provider tax on a health plan for the 2027, 2028, and 2029 calendar years.

Would set the tax amount at $8.85 per countable enrollee per month, unless that amount is modified by the department under certain conditions.

Would create the Medi-Cal Stability Fund for deposit of amounts collected.

Would require DHCS to request federal approval as is necessary to implement these MCO provider tax provisions.

2/3 vote due to tax increase

AB 176 (Budget Cmte) / SB 176 (Budget Cmte)

Taxation Trailer Bill

SAAS – software as a service – would redefine tangible personal property to include digital products effective 1/1/27 and subject them to sales/use tax.

Effective 1/1/27 (and permanently) all business tax credits would be limited to 50% or $5 million, whichever is greater.

From 1/1/27 to 1/1/30, the $800 minimum franchise tax for LPs, LLPs, and LLCs would be $400.

From 1/1/26 to 1/1/30, any payment from the federal Anti-Weaponization Fund would be taxed at a rate of 100%.

2/3 vote due to tax increases

AB 177 (Budget Cmte) / SB 177 (Budget Cmte)

“Fair Share” Study Trailer Bill

Would require the DOF by 3/1/27 to present to the JLBC one or more options for holding the state’s largest corporations accountable for the taxpayer costs of their employees enrolled in the Medi-Cal program, as specified, unless the Medicaid program-related provisions of a specified federal law are repealed on or before 3/1/27.

Calls it the “Fair Share from Big Corporations Act.”

Contains 14 legislative findings and declarations.

Majority vote budget bill junior

SB 1216 (Laird)

Would appropriate $5.838 billion from the GGRF to fund specified programs

$250 million to Zero-Emission Transit Capital Program and the Transit and Intercity Rail Capital Program

$1.25 billion to Department of Forestry and Fire Protection

No allocations unless specified conditions are met

CARB cannot create or distribute any Manufacturing Decarbonization Incentive allowances unless three conditions are met

Majority vote budget bill junior

NOTE: This bill is currently not part of the June 15 budget deal