SB1424 - Sales and use taxes: zero-emission vehicle fueling or charging.

Amended IN Assembly June 17, 2026 Amended IN Senate April 23, 2026 Amended IN Senate April 13, 2026 Amended IN Senate March 24, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1424 Introduced by Senator Archuleta February 20, 2026 An act to amend Section 6377.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST SB 1424, as amended, Archuleta. Sales and use taxes: zero-emission vehicle fueling. fueling or charging. Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state of, or on the storage, use, or other consumption in this state of, tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including a partial exemption for the sale of, or the storage, use, or consumption of, certain tangible personal property purchased for use by a qualified person to be used primarily in specified manufacturing, processing, refining, fabricating, recycling, research and development, or electric power, as prescribed. Existing law prohibits an exemption under that provision unless the purchaser furnishes the retailer with an exemption certificate, completed in accordance with any instructions or regulations as the department may prescribe, and the retailer retains the exemption certificate in its records and furnishes it to the department upon request. qualified tangible personal property purchased for use by a qualified person to be used primarily in any stage of the manufacturing, processing, refining, fabricating, or recycling of tangible personal property, beginning at the point any raw materials are received by the qualified person and introduced into the process and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling has altered tangible personal property to its completed form, including packaging, if required. Existing law (backfill requirement) requires an amount that equals the estimated revenue loss to the General Fund from the allowance of the above-described exemptions, with the concurrence of the Department of Finance, to be transferred from the Greenhouse Gas Reduction Fund to the General Fund, as prescribed. This bill would additionally exempt, under the provision described above, from state sales and use tax laws qualified tangible personal property purchased for use by a qualified person to be used exclusively in the processing, altering, or other preparation required for converting or conditioning hydrogen or electricity for the fueling of a zero-emission vehicle, as specified. The bill would also exempt, under the provision described above, from state sales and use tax laws qualified tangible personal property purchased by a contractor for use in the performance of a construction contract for a qualified person who will use that property as an integral part of an activity listed above, as specified. would, beginning July 1, 2027, define “processing” to include the altering, converting, conditioning, or other preparation of hydrogen or electricity for the purposes of selling the hydrogen for fueling or the electricity for charging a vehicle and would define “qualified tangible personal property” to include hydrogen fueling station equipment and charging station equipment and component parts used as an integral part of those activities. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program. This bill would provide that the backfill requirement does not apply to those additional exemptions. with respect to the exemptions allowed by the bill, as specified. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. This bill would take effect immediately as a tax levy. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Section 6377.1 of the Revenue and Taxation Code is amended to read: 6377.1. (a) Except as provided in subdivision (e), on or after July 1, 2014, and before July 1, 2030, there are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, any of the following: (1) Qualified tangible personal property purchased for use by a qualified person to be used primarily in any stage of the manufacturing, processing, refining, fabricating, or recycling of tangible personal property, beginning at the point any raw materials are received by the qualified person and introduced into the process and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling has altered tangible personal property to its completed form, including packaging, if required. (2) Qualified tangible personal property purchased for use by a qualified person to be used primarily in research and development. (3) Qualified tangible personal property purchased for use by a qualified person to be used primarily to maintain, repair, measure, or test any qualified tangible personal property described in paragraph (1) or (2). (4) Qualified tangible personal property purchased for use by a contractor purchasing that property for use in the performance of a construction contract for the qualified person, that will use that property as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, the generation or production, or storage and distribution, of electric power, or as a research or storage facility for use in connection with those processes. (5) Qualified tangible personal property purchased for use by a qualified person to be used primarily in the generation or production, or storage and distribution, of electric power. (6) (A) Except as provided in subparagraph (B), qualified tangible personal property purchased for use by a qualified person to be used exclusively in the processing, altering, or other preparation required for converting or conditioning hydrogen or electricity for the fueling of a zero-emission vehicle. (B) This paragraph does not apply to qualified tangible personal property purchased for the production of hydrogen fuel from raw materials, including, but not limited to, natural gas and fossil fuel feedstocks. (7) (A) Except as provided in subparagraph (B), qualified tangible personal property purchased by a contractor for use in the performance of a construction contract for a qualified person who will use that property as an integral part of an activity described in paragraph (6). (B) This paragraph does not apply to qualified tangible personal property purchased for the production of hydrogen fuel from raw materials, including, but not limited to, natural gas and fossil fuel feedstocks. (b) For purposes of this section: (1) “Department” means the California Department of Tax and Fee Administration. (2) “Fabricating” means to make, build, create, produce, or assemble components or tangible personal property to work in a new or different manner. (3) “Generation or production” means the activity of making, producing, creating, or converting electric power from sources other than a conventional power source, as defined in Section 2805 of the Public Utilities Code. (4) “Manufacturing” means the activity of converting or conditioning tangible personal property by changing the form, composition, quality, or character of the property for ultimate sale at retail or use in the manufacturing of a product to be ultimately sold at retail. Manufacturing includes any improvements to tangible personal property that result in a greater service life or greater functionality than that of the original property. (5) “Primarily” means 50 percent or more of the time. (6) “Process” means the period beginning at the point at which any raw materials are received by the qualified person and introduced into the manufacturing, processing, refining, fabricating, or recycling activity of the qualified person and ending at the point at which the manufacturing, processing, refining, fabricating, or recycling activity of the qualified person has altered tangible personal property to its completed form, including packaging, if required. Raw materials shall be considered to have been introduced into the process when the raw materials are stored on the same premises where the qualified person’s manufacturing, processing, refining, fabricating, or recycling activity is conducted. Raw materials that are stored on premises other than where the qualified person’s manufacturing, processing, refining, fabricating, or recycling activity is conducted shall not be considered to have been introduced into the manufacturing, processing, refining, fabricating, or recycling process. (7) (A) “Processing” means the physical application of the materials and labor necessary to modify or change the characteristics of tangible personal property. (B) Beginning July 1, 2027, “processing” includes the altering, converting, conditioning, or other preparation of hydrogen or electricity for the purposes of selling the hydrogen for fueling, or the electricity for charging, a vehicle. (8) (A) “Qualified person” means: (i) Prior to January 1, 2018, a person that is primarily engaged in those lines of business described in Codes 3111 to 3399, inclusive, 541711, or 541712 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2012 edition. (ii) On and after January 1, 2018, and before July 1, 2030, 2027, a person that is primarily engaged in those lines of business described in Codes 3111 to 3399, inclusive, 221111 to 221118, inclusive, 221122, 541711, or 541712 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2012 edition. (iii) On and after January July 1, 2027, and before July 1, 2030, a person that is primarily engaged in those lines of business described in Codes 3111 to 3399, inclusive, 221111 to 221118, inclusive, 221122, 447110, 447190, 541711, or 541712 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2012 edition. either of the following: (I) A person that is primarily engaged in those lines of business described in Codes 3111 to 3399, inclusive, 221111 to 221118, inclusive, 221122, 541711, or 541712 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2012 edition. (II) A person that is primarily engaged in those lines of business described in Codes 457110 and 457120 of the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget (OMB), 2022 edition. (B) Notwithstanding subparagraph (A), “qualified person” shall not include either of the following: (i) Prior to January 1, 2018, an apportioning trade or business that is required to apportion its business income pursuant to subdivision (b) of Section 25128 or a trade or business conducted wholly within this state that would be required to apportion its business income pursuant to subdivision (b) of Section 25128 if it were subject to apportionment pursuant to Section 25101. (ii) On and after January 1, 2018, and before July 1, 2030, an apportioning trade or business, other than a trade or business described in paragraph (1) of subdivision (c) of Section 25128, that is required to apportion its business income pursuant to subdivision (b) of Section 25128, or a trade or business, other than a trade or business described in paragraph (1) of subdivision (c) of Section 25128, conducted wholly within this state that would be required to apportion its business income pursuant to subdivision (b) of Section 25128 if it were subject to apportionment pursuant to Section 25101. (9) (A) “Qualified tangible personal property” includes, but is not limited to, all of the following: (i) Machinery and equipment, including component parts and contrivances such as belts, shafts, moving parts, and operating structures. (ii) Equipment or devices used or required to operate, control, regulate, or maintain the machinery, including, but not limited to, computers, data-processing equipment, and computer software, together with all repair and replacement parts with a useful life of one or more years therefor, whether purchased separately or in conjunction with a complete machine and regardless of whether the machine or component parts are assembled by the qualified person or another party. (iii) Tangible personal property used in pollution control that meets standards established by this state or any local or regional governmental agency within this state. (iv) (I) Prior to January 1, 2018, special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes. Buildings used solely for warehousing purposes after completion of those processes are not included. (II) On and after January 1, 2018, and before January July 1, 2027, 2030, special purpose buildings and foundations used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process, or that constitute a research or storage facility used during those processes, or the generation or production or storage and distribution of electric power. Buildings used solely for warehousing purposes after completion of those processes are not included. (III) On and after January 1, 2027, and before July 1, 2030, special purpose buildings and foundations, other than those used solely for warehousing purposes, that meet any of the following criteria: (ia) The special purpose buildings and foundations are used as an integral part of the manufacturing, processing, refining, fabricating, or recycling process or constitute a research or storage facility used during those processes. (ib) The special purpose buildings and foundations are used as an integral part of the generation or production or storage an [Text truncated for display. Full text available on Congress.gov.]