Explainer: California’s Community NEWS Act (AB 2222)

FAQ: The Community NEWS Act (AB 2222)

What does the Community NEWS Act do?

The law provides financial support for local news organizations of all kinds that employ local journalists. It does this by providing refundable tax credits to eligible organizations:

• • A job retention credit of $20,000 per journalist for the first five positions and $15,000 for each additional journalist. Qualified sole proprietors are eligible for a $20,000 credit.
  • A new hire credit of an additional $15,000 for each net new journalist position.
  • A part-time job credit of $7,500 per part-time journalist.

The job retention and new hire credits stack, so a news organization adding a new journalist can receive $30,000 to $35,000 in combined support for the position’s first full taxable year of employment.

Who is eligible?

The program is designed to be broadly inclusive. Eligible local news organizations include print newspapers and magazines, digital news outlets, and broadcast stations — whether they are for-profit businesses, nonprofits, or sole proprietorships. To qualify, an organization must be organized or registered to do business in California for at least 12 months before the year that they claim a credit, employ at least one full-time or part-time journalist, and meet a set of objective standards including disclosing ownership, maintaining a public error correction policy, and carrying media liability insurance.

When does the program take effect?

The law takes effect for tax years beginning Jan. 1, 2027. The first credits will be awarded based on employment in 2027 (qualifying local journalists will need to be employed for more than half the year), and funds for eligible news outlets are likely to arrive sometime in 2028 for organizations that file annual tax returns. We are still evaluating how the process would work for organizations that file quarterly returns and will share more details when they become available.

Does the government get to decide what counts as “real” journalism?

No. The qualification standards are deliberately objective and content-neutral. No state official evaluates the quality, viewpoint, or editorial decisions of an applicant. The program asks whether an organization meets verifiable structural criteria — not whether its journalism is good.

Are nonprofit news organizations eligible?

Yes. The Community NEWS Act is structured to allow nonprofits to benefit on the same terms as for-profit outlets. The law requires the Franchise Tax Board to create a process of eligibility for nonprofit newsrooms that may have no California income tax liability and issue guidance no later than Jan. 1, 2028. A 501(c)(3) news organization may claim the credit on a California exempt-organization return, even if it has no taxable income for the year. Because the credit is refundable, the organization receives the full value regardless of its tax liability.

What does “refundable” mean?

A refundable tax credit means that if the credit exceeds what the organization owes in taxes, the difference is paid out in cash. This is essential because many local news organizations — particularly nonprofits and small outlets — have little or no tax liability. Think of it as functioning like a grant for organizations that owe less in taxes than the credit is worth.

Are sole proprietors eligible?

Yes. A sole proprietor can qualify as both the eligible local news organization and the qualifying journalist, provided they meet the same standards as any other applicant — at least 30 hours per week of qualifying work and annualized income of at least $35,000. For sole proprietors and other businesses that pass through profits to the owners’ personal income tax returns, the credit is applied against their personal tax liability.

Can small, rural, or one-person newsrooms benefit?

Yes, and the program is designed to provide proportionately larger credits to news organizations with five or fewer journalists. The tiered retention credit provides $20,000 for each of the first five journalists, dropping to $15,000 for additional journalists.

Can organizations earn credits by paying freelancers?

No, independent contractors and freelancers are not covered by this program, although independent sole proprietors who operate their own news outlet are eligible. However, the funding that news outlets receive under this program is not restricted and may be spent on expanded freelance coverage.

What types of journalists qualify?

The Community NEWS Act defines a qualifying journalist broadly to include professional employees of a local news organization whose primary job duties involve gathering, preparing, directing the recording of, producing, collecting, photographing, recording, writing, editing, reporting, presenting, or publishing state or local community news. This covers news positions such as reporters, correspondents, photographers, videographers, editors, digital producers, and others. These jobs duties must occur within California, and the journalist must be a California resident for state income tax purposes.

How is a “new hire” defined?

A new journalism position is a net increase in average qualifying journalist employment between two taxable years. Because the calculation uses average daily headcounts of full-time journalists, this approach ensures that seasonal hiring and routine turnover do not count as new positions. If there’s a news organization merger, the journalists at each outlet are counted in both years, so buying a newsroom doesn’t create new positions by itself.

What safeguards prevent abuse or “pink slime” sites from claiming credits?

All applicants must publicly disclose their ownership, maintain a corrections policy, and carry media liability insurance. Organizations controlled by political action committees or 501(c)(4) organizations are disqualified. Platform-specific requirements — such as local FCC licensing for broadcasters, a USPS Periodicals permit or court-adjudicated general circulation for print, and audience data for digital outlets — provide further requirements. These standards are designed to screen out bad actors without giving government officials discretion over editorial content.

Can this policy apply to new forms of journalism on mediums like Substack or podcasts?

Local news innovators are welcome. What matters isn’t the medium or the business model, however modern or traditional. What matters is that you meet the Act’s objective indicators, like employing staff, having media liability insurance and a corrections policy, disclosing your ownership, and being able to demonstrate with data that you have at least a third of your audience in California. This policy was designed to be inclusive of evolving forms of community media that aspire to be job creators, while protecting the program from abuse or governmental discrimination.

Will this worsen the fiscal situation for the California budget?

Quite the contrary. This employment credit is funded by ending corporate tax deductions for executive compensation of more than $1 million. The California Franchise Tax Board estimates that over the program’s three years, the employment credit will cost $104 million while the deduction-tightening will bring in $152 million. Beyond that, numerous studies have shown that strengthening community news is likely to save taxpayers money. A recent study shows that California’s counties spend $47 million a year more in interest payments on municipal bond payments in areas with minimal news coverage. That’s because bond investors figure that areas without watchdog reporters will likely have governments that are more wasteful and inefficient.

Does receiving the credit affect other grants, donations, or public funding?

An organization can’t claim this credit and another California hiring credit for the same journalist. However, the credit is independent of other revenue sources. Receiving it does not restrict an organization’s eligibility for philanthropic funding, advertising revenue, or other public programs. In fact, under this program, a non-profit publisher could tell a funder that up to $35,000 in matching public dollars are available if the funder provides seed funding to help hire a new reporter.

How long does the program last?

Five years (taxable years 2027 through 2031). Continued availability beyond the initial authorization depends on legislative reauthorization by 2031.

What problem is this program trying to solve?

Since 2002, the United States has lost more than 80 percent of its local journalists, dropping from about 40 journalists per 100,000 residents to 7.8. Every week, more than two newspapers shut down, leaving communities with diminished access to reliable information. Communities that lose local news coverage see lower voter turnout, higher municipal borrowing costs, more government corruption, and weaker civic engagement. This policy provides a stable financial floor to prevent additional layoffs and make new hires possible as local news outlets innovate to meet the changing economic and technological environment.

Has this been tried anywhere else?

Yes. Illinois enacted a state-level journalist employment tax credit in 2024 and has distributed over $4 million per year in its first two years, supporting hundreds of journalist positions at over 130 local outlets. Rebuild Local News has published an in-depth analysis of the first year of the Illinois program here.

New York has enacted a similar program with a $30 million annual cap, and New Mexico recently approved a new program to go into effect in 2027.