ICE contractors could lose California tax credits

In California, AB 1675, the No Tax Breaks for ICE Contractors Act of 2026, would cut off state tax credits for companies covered by the bill if they do business with Immigration and Customs Enforcement, or ICE. The denial would apply to taxable years beginning on or after Jan. 1, 2027, and before Jan. 1, 2032, while the measure itself would take effect immediately.

The point is not to rewrite the corporate tax rate. It is to turn tax expenditures, the credits companies use to lower what they owe, into a pressure point for firms linked to federal immigration enforcement contracts.

What gets taken off the table

Under the California Corporation Tax Law, credits can soften the tax bill in ways that matter to companies balancing labor costs, investments and compliance. AB 1675 would deny those credits entirely for covered taxpayers during the five-year window the bill sets out.

That makes the proposal more targeted than a broad tax increase. It singles out a specific relationship, contracts with ICE, and uses the loss of state tax benefits to make that relationship more expensive to keep.

A wide Democratic push

The bill is backed by 21 Democrats, including Assemblymembers Alex Lee, Mia Bonta, Juan Carrillo and Liz Ortega, with three principal coauthors and a long list of coauthors behind them. Recorded votes show it cleared the Assembly floor 54-20, with six other votes.

That kind of support does not settle the larger political fight around immigration or state taxation, but it does show the bill has been drafted as a party-backed tool rather than a lonely protest measure.