California finally “caught up” its general federal conformity date—but that doesn’t mean your California return will match your federal return. SB 711 is a big simplification move, yet plenty of high-dollar differences remain. The win is knowing where the gaps still are—before estimates, provisions, and returns go sideways.
The headline: California’s general conformity date moved to January 1, 2025
SB 711 (the “Conformity Act of 2025”) changes California’s general “specified date” of conformity from January 1, 2015 to January 1, 2025, generally for taxable years beginning on or after January 1, 2025.
Translation for most taxpayers: this impacts 2025 returns filed in 2026 (calendar-year filers). You’ll see fewer “California adjustment” surprises in some areas—but not all.
“Conformity” ≠ “same as federal”
California conforms to federal law with modifications, and the state makes selective “conform / modify / not conform” decisions. SB 711 itself explicitly describes broad conformity “except as otherwise provided.”
Practically, you should assume your federal numbers are the starting point, not the finish line.
Below are the most common, high-impact areas where California still diverges (and where returns and estimates blow up if you don’t plan).
The 5 California–federal gaps that still matter most
1) Bonus depreciation: still a “no” in California
Federal rules allow additional first-year depreciation under IRC §168(k) (including TCJA-era bonus depreciation). California does not conform—meaning you still need a separate CA depreciation schedule and ongoing state adjustments.
Practical impact: cash tax and book/tax timing differences persist. If you bought equipment or vehicles, expect California taxable income to be higher than federal in early years.
2) Section 179 expensing: California caps it at $25,000
Federal §179 is far more generous. California keeps a much lower cap—$25,000 with a phaseout that starts at $200,000 of qualifying property placed in service.
Practical impact: small businesses that rely on §179 to manage taxable income often discover late that California disallows most of the federal expensing.
3) QBI deduction (199A): California doesn’t allow it
California does not conform to the federal IRC §199A Qualified Business Income deduction for pass-through owners.
Practical impact: pass-through owners can have a clean federal benefit and zero California benefit—so California effective tax rates can be meaningfully higher than expected.
4) R&D (Section 174 capitalization): California doesn’t follow the federal capitalization rule
Federal law requires specified research and experimental costs (post-2021) to be capitalized and amortized. California does not conform.
Practical impact: if you capitalized/amortized §174 federally, you may need a California adjustment back to a current deduction, plus deferred tax/provision implications for many businesses.
5) Personal item example (because it trips real people): alimony treatment differs
Under TCJA, many post-2018 divorce agreements changed alimony inclusion/deduction. California does not conform to that federal change.
Practical impact: individuals with alimony may have mismatched federal vs. California income reporting—easy to miss, messy to fix after the fact.
The 2026 filing-season playbook (what to do now)
Step 1: Treat SB 711 as a process change, not just “new law”
SB 711 reduces friction—but it does not eliminate the need for California adjustments.
Step 2: Run a “CA vs. federal difference scan” before you finalize estimates
Focus on the five areas above first. If any apply:
model CA taxable income separately
validate fixed asset schedules
flag pass-through owners expecting 199A
review §174 handling and documentation
Step 3: Lock down the operational controls
Fixed assets: maintain CA depreciation methods and lives where required; don’t assume your tax software “just handles it.”
Entity owners: PT owners should expect CA taxable income to be higher than federal if 199A is material.
R&D clients: align accounting/tax treatment and keep clean support files—this is a recurring audit zone.
Step 4: Don’t wait until the return “blows up”
Most California problems are not technical—they’re timing and documentation problems.