Personal Income Tax Law: Corporation Tax Law: California Retail Security Tax Credit.

Assembly Member Ávila Farías proposes a targeted tax credit program to offset retail security equipment costs for small businesses operating in disadvantaged communities. The California Retail Security Tax Credit would provide up to $4,000 annually to qualifying businesses that invest in security measures such as cameras, lighting, and alarm systems.

The program would operate during tax years 2026 and 2027, with eligibility restricted to businesses earning $5 million or less in annual revenue and employing 25 or fewer full-time equivalent workers. Qualified businesses must operate retail locations in state-designated disadvantaged communities and maintain employment for at least 40 weeks of the prior tax year. The total credits available across all recipients cannot exceed $10 million per year.

The Franchise Tax Board would administer the program through a reservation system, accepting applications beginning January 2026. If requests exceed the annual allocation by the February 1 deadline, credits would be distributed proportionally among qualified applicants. The board would continue accepting applications on a rolling basis until reaching the yearly cap. Annual reports to the Legislature would track program utilization through the number of businesses receiving credits.

The measure includes parallel provisions under both personal income and corporate tax codes to accommodate different business structures. Any tax deductions for security equipment purchases must be reduced by the amount of credit received. The program automatically terminates on December 1, 2027.