California Enacted New Personal Tax Legislation

New tax conformity rules affect alimony deductions and residency status for California state taxpayers.

Updated on Sept. 22, 2026 in Taxes

Bold flat-color editorial illustration in navy, cream, and red, depicting stacked geometric steel blocks as an abstract tax code system. — Governor Gavin Newsom signed Senate Bill 1435, updating California's state tax code to improve conformity with federal Internal Revenue Code provisions. AI Illustration. Upload story photo >

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Governor Gavin Newsom has signed Senate Bill 1435 into law, effectively updating California's state Internal Revenue Code conformity provisions. The legislation applies retroactively to tax years beginning on or after January 1, 2025.

Why it matters

This law provides clarity for taxpayers by permanently adopting several tax provisions and cleaning up outdated references to federal code. These changes specifically impact how nonresidents and part-year residents manage their deductions.

The legislation signed as SB 1435, Chapter 236, creates permanent conformity for IRC Section 215 as it stood on January 1, 2015. Taxpayers should note that while this codifies existing rules, specific impacts on personal income tax liability will vary by individual financial situation.

The players

Gavin Newsom

The Governor of California who signed Senate Bill 1435 into law.

The details

The new law updates California tax standards by removing outdated references to repealed federal code and clarifying how specific IRC sections, such as Section 197 for goodwill amortization, apply at the state level. Notably, the legislation establishes a partial alimony deduction for nonresident and part-year residents based on a specific income ratio. It also explicitly removes the application of IRC Section 163(j) business interest limitations and IRC Section 1446(f) partnership withholding requirements for state income tax purposes.

January 1, 2010: Reference date for IRC Section 457 provisions.
January 1, 2015: Reference date for IRC Section 215 and 682 provisions.
January 1, 2025: Retroactive start date for the new tax law applicability.
December 31, 2025: Deadline for certain divorce instrument conformity rules.
September 14, 2026: Official effective date of Senate Bill 1435.

Money Landscape

This legislation updates the California Internal Revenue Code conformity provisions to align with federal standards. It follows a regular pattern of state-level adjustments to ensure tax reporting remains current with the evolving federal tax code.

If you are a part-year or nonresident taxpayer, review your potential eligibility for the partial alimony deduction established under the new law. Consult a qualified tax professional to evaluate how these retroactive updates to your 2025 tax filings may affect your state liability.

The takeaway

The enactment of SB 1435 brings permanent clarity to California's state tax code, particularly for nonresidents claiming alimony deductions. Review your 2025 tax documentation for any changes related to these updated conformity rules with your accountant or tax advisor.