CA AB1790

Requires corporations filing taxes on a "water's-edge" basis to include 40% of global intangible low-taxed income (GILTI) from controlled foreign corporations as business income, effective for taxable years beginning January 1, 2026

Terminates all existing water's-edge elections and prohibits new elections for taxable years beginning on or after January 1, 2028, transitioning California to mandatory worldwide combined reporting for multinational corporations

Allows taxpayers to voluntarily terminate their water's-edge election without Franchise Tax Board consent during the transition period (January 1, 2026 through December 31, 2027)

Changes the threshold for including foreign corporations in water's-edge calculations from a 20% average of property, payroll, and sales factors to solely a 20% sales factor in the United States

Requires two-thirds legislative approval to pass as it would result in higher taxes for affected corporations