Tax update: new state tax laws taking effect in 2009, 2011.

• Author: Reynolds, Bob
• Position: CA Tax

None of the various California tax law changes put into place by state legislation were enacted to commence in 2010; instead, they were either immediately effective in 2009 or deferred to 2011.

Changes Effective in 2009

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Sales and Use Tax Rate Increased

Beginning April 1. 2009, and effective through June 30, 2011. the state sales and use tax rate is increased by percent. The increase is extended through June 30, 2012. if an amendment to the California Constitution related to certain budget matters was approved in the statewide election May 19.

Vehicle License Fee Increase

Effective May 19, 2009. the state Vehicle License Fee increased from 0.65 percent to 1.15 percent. The increase does not apply to certain truck trailers, semitrailers and other commercial vehicles. The rate increase is effective through June 30, 2011, and will be extended to June 30, 2013. if voters approved a Constitutional amendment related to budget matters in the statewide election May 19.

Individual Income Tax Rates Increased

For tax years beginning on or after Jan. 1, 2009, the individual tax rates are increased by 0.25 percent. The rate increase applies to resident and nonresident individuals, to taxable estates and trusts, and to regular and alternative minimum tax rates.

The rate increase is effective through Dec. 31, 2010, and will be extended through Dec. 31, 2012, if the California Constitution amendment related to certain budget matters was approved in the statewide election May 19.

Corporate tax rates (including S corporations) remain unchanged.

Dependent Credit Reduced by $210

For tax years beginning on or after Jan. 1, 2009, the dependent credit is reduced to an amount equal to the individual personal exemption credit. Actual 2009 credit amounts are not yet determined, as the amounts are adjusted annually for inflation. The 2008 amounts in effect are $309 for dependent credit and $99 for the personal credit. Based on these 2008 amounts, the 2009 dependent credit would be reduced by $210 per dependent.

The dependent credit reduction is effective through Dec. 31, 2010, and extended through Dec. 31, 2012, if the California Constitution amendment related to certain budget matters was approved in the statewide election May 19.

New Home Purchase Tax Credit

Individuals who purchase a new, never previously occupied, single-family residence between March 1, 2009-March 1.2010, will be eligible for a credit equal to the lesser of 5 percent of the...