Key tax and policy developments from October include a multistate constitutional challenge to California’s tax system, legislation to update California’s conformity with the federal tax code, and major clean-energy incentives.
Tax Legislation
California Updates Federal Tax Conformity (October 6, 2025) – California enacted one of its most consequential tax changes in a decade by updating its Internal Revenue Code conformity date from January 1, 2015, to January 1, 2025, through enactment of SB 711. This change aligns California with a wide range of federal provisions enacted over the past 10 years, while preserving California-specific deviations. Notably, the state does not conform to changes enacted under the mid-2025 “One Big, Beautiful Bill Act,” underscoring California’s selective approach to federal alignment. Read more.
Tax Litigation
Florida Seeks Supreme Court Review of California Tax System
Florida Attorney General James Uthmeier has petitioned the U.S. Supreme Court to hear a challenge alleging that California’s tax system unconstitutionally penalizes multistate corporations, particularly those that relocate or expand operations across state lines.
The complaint argues that California’s apportionment and sourcing framework discriminates against interstate commerce by effectively increasing tax burdens on companies with multi-state footprints. While the legal merits remain uncertain—and Supreme Court review is discretionary—the filing highlights growing interstate friction over aggressive state tax regimes. The case could reopen dormant Commerce Clause questions around state income taxation,
Clean Energy and Advanced Manufacturing Incentives
Clean Energy Credit Payments Excluded from Income
California enacted SB 302 to ensure clean energy developers can fully benefit from federal refundable and transferable tax credits. The law excludes from California taxable income:
Direct pay refunds received under IRC section 6417
Payments received for transferred credits under IRC section 6418
The exclusion applies to tax years beginning on or after January 1, 2026, and before January 1, 2031, providing planning certainty for renewable energy and infrastructure developers.
Expanded Sales Tax Exclusions for Energy and Manufacturing
California extended its sales and use tax exclusion for qualifying renewable energy and advanced manufacturing equipment through January 1, 2028. SB 86 also expands eligibility to include nuclear fusion generation facilities.
Large employers seeking the exclusion must certify compliance with specified labor standards beginning in 2026, reinforcing the state’s linkage between tax incentives and workforce policy.
Property Tax
Solar Property Tax Exclusion Clarified
SB 710 revised California’s active solar energy system property tax exclusion by removing the prior fixed sunset date. Systems qualifying before January 1, 2027, retain the exclusion indefinitely unless ownership changes.
Related legislation provides property owners with a three-year window to file claims retroactively, reducing forfeiture risk due to administrative delay.
Property Tax Relief Following California Fires
California enacted a package of bills extending deadlines and preserving property tax benefits for owners affected by recent wildfires, particularly in Los Angeles County.
Key provisions include:
Extended timeframes to transfer base-year property values to replacement homes
Expanded deadlines for intergenerational transfer claims
Additional assessor discretion for disaster-related reassessments
These measures provide flexibility for rebuilding and succession planning while preserving Proposition 13 protections.
Wealth Tax
Wealth Tax Proposals Resurface
October also saw renewed attention to proposed ballot initiatives targeting ultra-high-net-worth individuals through a one-time “billionaire tax.” While not yet enacted, the proposals signal continued pressure to use targeted wealth taxes to address fiscal and housing challenges. Businesses and executives should expect renewed debate heading into the 2026 election cycle.
Climate and Energy
Newsom Signs Bill to Allow Sale of E15 Gasoline
Governor Newsom signed AB 30, which allows E15 fuel, an additional blend of gasoline, to be sold in California while the California Air Resources Board (CARB) studies its impact on clean air requirements. E15 is widely accepted as a way to reduce gasoline prices without adding environmental harm. Read more at California Energy Journal.
California Sets Standards for EV Charger Reliability
The California Energy Commission (CEC) voted unanimously to require publicly funded fast chargers for electric vehicles (EV) to be functional 97% of the time. This applies to chargers built in 2024 or later. Read more at California Energy Journal.
ExxonMobil Challenges California Climate Reporting Laws on Speech Grounds
ExxonMobil is challenging California’s greenhouse gas (GHG) emissions reporting laws as a violation of the company’s right to free speech. The company is asking the court to block implementation of SB 253 and SB 261, scheduled to take effect in 2026. Exxon filed the lawsuit in the U.S. District Court for the Eastern District of California on October 24, 2025. Read more at California Energy Journal.
Trump to Open California Coast to Offshore Oil Drilling
The Trump administration plans to open large areas of the east and west coasts and Alaska to offshore oil drilling. The new areas in federal waters are part of the administration’s proposed five-year offshore oil drilling program and would include areas previously withdrawn for environmental protection. The plan would open lease sales in federal waters off Alaska in 2026, the coasts of southern and central California in 2027, and along the Atlantic Coast in 2028. Read more at California Energy Journal.