California FTB developments October 11, 2026
What changed this week
| Development | Who it affects |
|---|---|
| SB 1435 cleans up the 2025 federal conformity update and keeps California off IRC §163(j) | California partnerships, S corporations, and individuals computing 2025 returns, especially those with meaningful business interest expense, excess business loss positions, or EITC claims. |
| FTB posts 2026 indexed amounts: brackets, standard deduction, and credits | California individual taxpayers planning 2026 withholding, estimated payments, or Q4 bonuses and distributions. |
| C corporation extended due date for Form 100 is one month out | California calendar-year C corporations that are on extension and still have not filed Form 100. |
| FTB offers monthly virtual presentations on nonresident and real estate withholding | California business owners who pay nonresident contractors or performers, buyers or sellers in California real estate, foreign sellers, and property managers and escrow officers. |
SB 1435 cleans up the 2025 federal conformity update and keeps California off IRC §163(j)
Senate Bill 1435 was enacted on September 14, 2026 (Chapter 233, Statutes of 2026) and builds on SB 711 (Chapter 231, Statutes of 2025), which moved the Revenue and Taxation Code’s general specified-date conformity to the Internal Revenue Code from January 1, 2015 to January 1, 2025 for taxable years beginning on or after January 1, 2025. SB 1435 is mostly technical code maintenance to conform to nonsubstantive federal public laws, with three substantive items: it keeps California’s Earned Income Tax Credit disqualified investment income threshold at $3,400 regardless of federal changes; it clarifies that the Personal Income Tax Law does not conform to IRC section 163(j) business interest limitation, as modified by TCJA section 13301(a) and the CARES Act section 2306; and it conforms the Personal Income Tax Law to the CARES Act section 2304 clarification that the excess business loss limitation for non-corporate taxpayers is determined without regard to deductions, gross income, or gains attributable to a trade or business for services performed as an employee. All SB 1435 changes apply for taxable years beginning on or after January 1, 2025.
Who it affects: California partnerships, S corporations, and individuals computing 2025 returns, especially those with meaningful business interest expense, excess business loss positions, or EITC claims.
What to do
Have your preparer confirm that the 2025 California workpapers decouple from IRC section 163(j) for personal income tax, apply the CARES Act exclusion for employee services when computing excess business loss, and keep the EITC disqualified investment income threshold at $3,400.
Primary source: California FTB Final Bill Analysis, Senate Bill 1435
FTB posts 2026 indexed amounts: brackets, standard deduction, and credits
The FTB announced the 2026 tax tier indexed amounts, with inflation measured by the California CPI from June 2025 to June 2026 at 3.4%. The 2026 standard deduction rises to $5,900 for single or married filing separately (up from $5,706) and $11,800 for joint, surviving spouse, or head of household (up from $11,412). The personal exemption credit rises to $158 for single, separate, and head of household (up from $153) and to $316 for joint or surviving spouses (up from $306); the dependent exemption credit rises to $491 (up from $475). The Renter’s Credit is available for single filers with AGI of $55,830 or less and joint filers with AGI of $111,660 or less. The complete 2026 rate schedules for Schedules X, Y, and Z are also published, with the top 12.3% bracket starting at $768,213 for single, $1,536,426 for joint, and $1,044,771 for head of household. The FTB is still finalizing the 2026 threshold amounts for computing excess business losses.
Who it affects: California individual taxpayers planning 2026 withholding, estimated payments, or Q4 bonuses and distributions.
What to do
Update 2026 estimated-tax projections and payroll withholding using the new brackets and standard deduction, and watch the FTB page for the finalized 2026 excess business loss threshold if you have a flow-through loss position.
Primary source: California Standard Deduction, Franchise Tax Board
C corporation extended due date for Form 100 is one month out
The extended due date for Form 100, California Corporation Franchise or Income Tax Return, is the 15th day of the 11th month after the close of a C corporation’s taxable year, which is November 15, 2026 for calendar-year filers. The seven-month extension applies only to filing; payment of the tax liability must be made by the original due date (April 15, 2026 for calendar-year filers). Late filing penalties are calculated from the original due date if the return is not filed by the extended due date, so a missed extended due date wipes out the extension benefit.
Who it affects: California calendar-year C corporations that are on extension and still have not filed Form 100.
What to do
Lock in a mid-October internal deadline for your preparer so the return clears sign-off before November 15, 2026, and reconcile any mid-year payments against the balance due or expected refund.
Primary source: Form 100 (2025), California Corporation Franchise or Income Tax Return
FTB offers monthly virtual presentations on nonresident and real estate withholding
The FTB runs two 25-minute virtual withholding presentations each month, followed by live Q&A over Microsoft Teams or Zoom. The California Nonresident Withholding session is held on the second Wednesday of each month at 10 AM PST and covers withholding requirements, income subject to withholding, agent requirements, exceptions, waivers, reductions, liability, and penalties. The California Real Estate Withholding session is held on the third Tuesday of each month at 10 AM PST and covers withholding requirements, common Form 593 mistakes, withholding responsibilities, installment sales, trusts, foreign sellers, and limited liability companies.
Who it affects: California business owners who pay nonresident contractors or performers, buyers or sellers in California real estate, foreign sellers, and property managers and escrow officers.
What to do
If you are closing on California real estate in the next six months or paying California-source income to nonresidents, put the relevant session on the calendar before the next cycle.
Primary source: Form 587 (2026), Nonresident Withholding Allocation Worksheet
What this means for your business
- If you file a California personal, partnership, or S corporation return for 2025, SB 1435 keeps section 163(j) non-conformity and tightens the excess business loss rule for non-corporate taxpayers.
- If you are planning 2026 personal withholding or estimated payments, use the new 2026 brackets, standard deduction, and credit amounts the FTB has published.
- If you have a calendar-year California C corporation on extension, November 15, 2026 is the hard deadline to file Form 100.
- If any part of your business touches California-source income paid to nonresidents or California real estate, the FTB’s monthly withholding sessions are a short, structured way to catch up on the rules.
This month in California FTB, in one line
SB 1435 cleans up the 2025 federal conformity update and locks in California’s section 163(j) non-conformity and tightened excess business loss rule; the FTB posted 2026 indexed brackets, standard deduction, and credits; and the Form 100 extended due date for calendar-year C corporations is November 15, 2026.
Frequently asked questions
Q. Does California now follow the federal IRC §163(j) business interest limitation under the SB 711 and SB 1435 conformity update?
For the Personal Income Tax Law, no. SB 1435 clarifies that California’s Personal Income Tax Law does not conform to IRC section 163(j), as modified by TCJA section 13301(a) and CARES Act section 2306, for taxable years beginning on or after January 1, 2025. California partnerships, S corporations, and individuals should continue to compute business interest expense under California’s own rules for Personal Income Tax Law purposes.
Q. What are the 2026 California standard deduction and personal exemption credit amounts?
For 2026, the standard deduction is $5,900 for single or married filing separately (up from $5,706 in 2025) and $11,800 for joint, surviving spouse, or head of household (up from $11,412). The personal exemption credit is $158 for single, separate, and head of household taxpayers (up from $153) and $316 for joint filers or surviving spouses (up from $306). The dependent exemption credit is $491 (up from $475).
Q. When is a California C corporation’s extended Form 100 due?
The extended due date for Form 100 is the 15th day of the 11th month after the close of the C corporation’s taxable year, which is November 15, 2026 for calendar-year filers. The seven-month extension covers filing only; payment of the tax liability was due on the original due date, which was April 15, 2026 for calendar-year filers. Missing the extended due date causes late filing penalties to be calculated from the original due date.
Q. Can I attend the FTB’s withholding presentations if my business is not California-based but pays California-source income or sells California real estate?
Yes. The California Nonresident Withholding and California Real Estate Withholding presentations are open to any attendee and cover the rules that apply when California-source income is paid to a nonresident or when California real estate is sold, regardless of the payer’s or seller’s home state.
