Abstract: Extends the period for which C-corporation tax filers can claim a tax credit for local inventory taxes paid to June 30, 2036, but reduces the credit amount for those filers by 20% every two years before eliminating the credit in 2036.

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Present law establishes an income tax credit for ad valorem taxes paid to political subdivisions on inventory held by manufacturers, distributors, and retailers, referred to hereafter as local inventory taxes paid.

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Present law provides that no credit for local inventory taxes paid shall be allowed to C-corporations for taxable periods beginning on or after July 1, 2026. Proposed law changes this sunset date for the tax credit for C-corporations to July 1, 2036.

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Proposed law provides that for taxable periods beginning on or after July 1, 2028, the credit for a C-corporation shall be reduced by 20% every two years until the credit sunsets on July 1, 2036.

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Proposed law applies to taxable periods beginning on or after Jan. 1, 2026.

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Effective January 1, 2026.