California DOR Updates Minimum Tax Credit Instructions

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Published February 13th, 2026

Detected March 17th, 2026

Summary

The California Department of Revenue (DOR) has updated instructions for computing the minimum tax credit for taxable year 2025. These changes clarify how corporate, individual, and fiduciary taxpayers should calculate their prior year alternative minimum tax credit, removing a previous requirement to reduce the credit by prior year utilized credits.

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What changed

The California Department of Revenue (DOR) has issued Public Service Bulletin 26.02 to update form instructions related to the credit for prior year alternative minimum tax (AMT), also known as the minimum tax credit. Specifically, the DOR has removed a sentence from the instructions for Schedule P (100), Schedule P (100W), and FTB 3510, which previously required taxpayers to reduce their prior year AMT by credits used to lower that prior year AMT. This change simplifies the calculation for corporate, individual, and fiduciary taxpayers.

These updated instructions clarify that corporate taxpayers generally compute the minimum tax credit by adding their prior year AMT and any unused minimum tax credit carryover. Individual and fiduciary taxpayers compute the credit similarly, to the extent the prior year AMT was due to deferral preferences. Compliance officers should ensure that their tax preparation processes and systems reflect these updated calculation methods for taxable year 2025 to avoid misstatements on tax filings. No specific compliance deadline is mentioned, as this is a clarification of existing instructions for the upcoming tax year.

What to do next

Review updated instructions for Schedule P (100), Schedule P (100W), and FTB 3510 regarding minimum tax credit calculations.
Ensure tax preparation software and internal processes reflect the revised calculation method for taxable year 2025.
Advise affected corporate, individual, and fiduciary taxpayers on the updated calculation requirements.

Source document (simplified)

Updates to form instructions for taxable year 2025 relating to credit for prior year alternative minimum tax Public Service Bulletin 26.02

February 13, 2026

Purpose of bulletin

To inform taxpayers FTB has updated form line instructions for computing the credit for prior year alternative minimum tax (referred to as the "minimum tax credit").

Previously, the line instructions for the minimum tax credit required taxpayers to reduce their prior year alternative minimum tax (AMT) with the credits taxpayers used to lower their prior year AMT. The updated form line instructions no longer require that reduction.

Background

FTB deleted the following sentence in Schedule P (100) Instructions, Specific Line Instructions, Part III, Line 1 instruction:

FTB deleted the following sentence in Schedule P (100W) Instructions, Specific Line Instructions, Part III, Line 1 instruction:

FTB also deleted the following sentences in FTB 3510 Instructions, Specific Line Instructions, line 28 instruction:

Schedule P (540), Part III, line 23 and line 24, column (b). Schedule P (540NR), Part III, line 23 and line 24, column (b). Schedule P (541), Part IV, line 18 and line 19, column (b).
Write the amount of the reduction in the space to the left of line 28.

Additional information

With these line instruction changes, corporate taxpayers generally compute the minimum tax credit available by adding their prior year AMT and their prior year unused minimum tax credit carryover.

Individual and fiduciary taxpayers generally compute the minimum tax credit in the same manner to the extent the amount of AMT was attributable to deferral preferences.