Lawn replacement · California

California State Income Tax Exclusion for Turf Rebates

Run by State of California (Franchise Tax Board; Revenue and Taxation Code section 17138.2)

OpenLast checked October 17, 2026

What you get: Full exclusion of the rebate, voucher or other financial incentive from California taxable income
Who qualifies: Any California taxpayer who receives a rebate, voucher or other financial incentive from a public water system, local government or state agency for participating in a turf replacement water conservation program.
Where: Any California taxpayer who receives a turf replacement rebate from a public water system, local government or state agency.
Status: Open. Covers tax year 2026 per statute text; scheduled to expire (applies through tax years before 2027, repealed Dec 1, 2027)
Type of payment: Tax credit or exemption

What you do

Nothing to apply for: turf replacement rebates you receive from a public water system, local government or state agency are not counted as California gross income.

Requirements

Applies to taxable years beginning on or after January 1, 2022 and before January 1, 2027 (statute text)
Section is repealed as of December 1, 2027 by its own terms
Incentive must come from a public water system, local government or state agency for a turf replacement program

How to apply

1No application; do not report the qualifying rebate as California income
2Keep the rebate award letter and any Form 1099 the agency sends
3Ask a tax adviser about federal treatment, which this section does not cover

Timing and deadlines

not applicable

Applies to tax years beginning before 2027

Combining it with other programs

Applies on top of any qualifying turf replacement rebate

Sources

Last checked October 17, 2026. See something out of date? Tell us.

Sow is not affiliated with any of these agencies or utilities. Amounts and rules change, often at the start of a fiscal year, so confirm the details on the official page before you start a project. How we research these programs