Legislative Update

SUT Exemption for Manufacturing and R&D Equipment Advances

stock manufacturing

Legislation to fully exempt California manufacturing and research-and-development equipment from sales and use tax was approved May 19 by the Assembly Appropriations Committee (AB 1951, Grayson).

Amendments made by the committee provide that the exemption would apply only to equipment purchases under $200 million – the same cap used for the existing partial exemption. Prior to the amendments, the bill would have eliminated the cap from 2023 through 2028.

The legislation, co-sponsored by CalTax and the California Manufacturers and Technology Association, now goes to the Assembly floor.

The Appropriation Committee’s action occurred during a whirlwind hearing in which it decided the fate of 601 bills previously placed on its “suspense file.”

Other bills of note acted upon by the committee include:

  • AB 2095 (Kalra), a CalTax-opposed bill that would require private employers with 1,000 or more employees to submit various statistics to the Labor and Workforce Development Agency and require the agency to establish a scoring methodology for businesses, was held by the committee and cannot be acted upon for the remainder of the legislative session.
  • AB 1983 (Fong), a CalTax-supported bill that would reinstate best-value procurement practices for the purchase of heavy mobile fleet vehicles and special equipment by the Department of General Services – and remove an expired pilot program’s $50 million annual cap on purchases made under these practices – was approved unanimously.

Of the 601 bills considered by the committee, 434 were sent to the Assembly floor.