California has taken an important step to simplify tax compliance for taxpayers, tax professionals, and tax agencies. With the signing of SB 711 (McNerney), the state has updated its conformity date with the federal Internal Revenue Code from Jan. 1, 2015, to Jan. 1, 2025.
For years, California has taken a selective approach to federal tax conformity—reviewing each change one by one. While this gave lawmakers the chance to weigh fiscal impacts and policy considerations on major issues, smaller technical updates often fell through the cracks. Over time, that created real challenges: taxpayers and practitioners were stuck working with outdated rules, keeping separate records and making countless adjustments because California’s tax laws lagged nearly a decade behind federal law.
SB 711 helps close that gap. The bill brings California into alignment with a wide range of federal tax changes made since the last major update. While it doesn’t automatically adopt every federal change—which can be costly or politically complex—it does bring in many of the smaller, technical provisions that had been left out of step for years.
Why This Matters
Reduces Complexity: When state and federal rules don’t match, taxpayers and practitioners must make multiple adjustments to file returns. SB 711 reduces these adjustments, simplifying the process.
Simplifies Compliance: Complexity increases the risk of errors, penalties, and interest. With SB 711, filing becomes more straightforward, helping taxpayers prevent errors and unintentional non-compliance.
Eases Administrative Burden: Non-conformity adds time and cost for taxpayers, tax professionals, and the Franchise Tax Board (FTB). By streamlining reporting and audits, SB 711 helps everyone involved.
Tax conformity may not make headlines, but it has a huge impact on the day-to-day work of tax professionals and the ability for taxpayers to meet their tax compliance obligations. SB 711 is a smart, practical policy update that keeps California’s tax system current and relevant. While it doesn’t include the latest OBBB changes, SB 711 addresses a decade of technical updates and sets California up for future conformity efforts.
This bill reflects collaborative work by the author, legislative committee staff, the Franchise Tax Board, and stakeholders across the tax community. CalCPA was proud to actively support this effort on behalf of our members and the clients and communities they serve.
