April’s California tax and business policy developments centered on rising corporate tax exposure, the potential qualification of a state wealth tax initiative for the 2026 ballot, and escalating federal-state conflict over energy production and infrastructure policy.
Tax
Water’s-edge repeal advances as major corporate tax fight
AB 1790 would phase out California’s water’s-edge election beginning in 2028, effectively requiring affected multinational unitary groups to use worldwide combined reporting. The bill also would change water’s-edge rules before repeal, including a revised 20% U.S. sales-factor test and inclusion of 40% of net CFC tested income for certain filers. The proposal would materially change California tax planning for multinational groups and has become one of the year’s central business tax debates.
Manufacturing depreciation bill held in committee
AB 2377, which would create accelerated depreciation deductions for qualified manufacturing property placed in service in California, was held under submission in committee on April 27. The bill would apply for taxable years beginning on or after Jan. 1, 2027, and before Jan. 1, 2032.
Small-business hiring credit considered
AB 1565 would allow businesses with fewer than five employees to claim a credit equal to 40% of qualified first-year wages paid to certain employees with felony convictions, capped at $5,000 per taxable year. The bill was heard April 27 in Assembly Revenue and Taxation.
Local news tax credit moves through committee review
AB 2222 would create a refundable tax credit for local news organizations that hire and retain qualifying journalists, beginning in 2027 and running through 2031.
Billionaire tax campaign says it has enough signatures
Supporters of the proposed 2026 Billionaire Tax Act announced April 28 that they believed they had gathered enough signatures to qualify for the November ballot. The measure would generally impose a one-time 5% tax on net worth above $1 billion; the Secretary of State has until June 25 to determine qualification. Even if limited to ultra-high-net-worth taxpayers, the proposal will likely intensify California’s broader debate over wealth, migration, revenue volatility and tax competitiveness.
Other tax news and analysis
Jared Walczak, “California’s Mandatory Worldwide Combined Reporting Proposal Is a Mistake,” Tax Foundation, April 21, 2026.
WalletHub ranked California as the 11th highest “tax burdened states” in the country.
Robertas Bakula, “California’s billionaire tax is an immoral scam,” Orange County Register, April 23, 2026.
J.D. Tuccille, “Report: High Taxes and Burdensome Regulations Are Killing California,” Reason, April 20, 2026.
Business Regulation and Enforcement
Albertsons opioid settlement adds to state enforcement trend
Attorney General Rob Bonta announced an agreement in principle requiring Albertsons to pay up to $773.8 million to address its alleged role in the opioid epidemic, while negotiations over injunctive relief continued. The proposed settlement is part of California’s broader pattern of aggressive consumer protection and public health enforcement actions targeting large national companies.
AI Regulation
No Robo Bosses Act
SB 947, known as the “No Robo Bosses Act,” continued advancing through the Legislature in April. The proposal would restrict employers from using automated decision systems to make disciplinary, termination, or worker deactivation decisions without human oversight. The bill reflects broader efforts to regulate workplace uses of AI and algorithmic management tools.
AI chatbot toys
SB 867 also continued advancing through the legislature. The bill would prohibit the sale of certain AI-enabled companion chatbot toys marketed to children. The proposal would subject violations to existing civil liability provisions applicable to companion chatbot operators under California law.
Energy and Climate
Trump Directs Federal Financial Support to Increase Energy Production
President Donald Trump invoked the Defense Production Act (DPA) to direct federal support toward oil, gas, coal, and electric grid infrastructure through a series of presidential determinations on April 20, 2026. The determinations come only weeks after the Trump administration directed Sable Offshore Corp. to restart the oil pipeline system serving the Santa Ynez Unit offshore oil field. In both cases, the administration cited national security risks tied to energy supply disruptions. The actions further intensified federal-state conflict over California energy policy and offshore production.
Other energy news and analysis
California wants to drain road repair funds to subsidize green jet fuel that critics say costs 10x more than effective climate solutions. The proposal was shaped behind closed doors — a Houston oil company quietly lobbied Newsom’s office to craft it. Cal Matters, April 8, 2026.