CA AB2128

Allows a tax credit equal to 40% of qualified first-year wages paid to qualifying employees for taxable years beginning January 1, 2025 through December 31, 2029.

Limits the credit to $5,000 per qualified employee, regardless of taxable year, and applies to both personal income tax (Section 17053.10) and corporation tax (Section 23621.1).

Defines "qualified employee" as an individual convicted of a felony who was hired within one year of conviction or prison release, has worked for the employer at least six months, and performs services in California.

Restricts credit eligibility to taxpayers with fewer than five employees and excludes wages covered by federal on-the-job training funds or wages for services performed during labor strikes or lockouts.

Requires the Franchise Tax Board to report annually to the Legislature by December 1 on the number of taxpayers receiving credits and average credit amounts to measure effectiveness in reducing recidivism among recently released individuals.