If signed by Gov. Gavin Newsom, a bill passed yesterday by supermajorities in the California legislature would be the most economically significant law supporting local news in the country, possibly in American history.
The Community Newsroom Employment and Workforce Sustainability Act (the Community NEWS Act, AB 2222) was introduced earlier this year by Assemblymember Christopher M. Ward and sponsored by Rebuild Local News. The bill would create refundable tax credits for California local news organizations based on the number of journalists they employ, with enhanced benefits for the smallest community news providers and outlets creating new journalist jobs. Commercial and nonprofit news outlets of all mediums are eligible.
AB 2222 is estimated to provide more than $40 million per year to news outlets around the state.
The bill is structured to support community news while preserving editorial independence and preventing government officials from rewarding or punishing outlets based on content. We work closely with the Reporters Committee for Freedom of the Press to ensure that all of Rebuild Local News’ approaches are First-Amendment-friendly, nonpartisan and content neutral.
The benefits
The job retention credit is worth $20,000 per journalist for up to five full-time positions, plus $15,000 per every additional journalist. Part-time journalist positions would be supported with $7,500 credits. A $15,000 new hire credit would be awarded to news organizations that expand journalist headcount, which is stacked on top of the retention credits. Even though it’s a “tax credit,” because it is “refundable,” that means the news outlet would get cash if the credit exceeds their tax burden.
Use this credit calculator to estimate the dollar benefit to your news organization from AB 2222 (Note: The template is view‑only. If you’re signed into a Google account, you can make a copy to edit. If not, you can download it as an Excel file and fill it in there).
AB 2222 is fully paid for and strengthens California’s budget because it is financed by a measure that would end corporate tax breaks for executive compensation above $1 million. Federal law does not allow this type of corporate tax break, and with this bill California’s legislature decided to align their tax law and use most of the money to support community news jobs.
Eligibility
We designed this policy so that local print, digital and broadcast outlets alike benefit, regardless of whether they are for-profit businesses, 501(c)3 nonprofits or sole proprietorships. Outlets can apply as any one of the following types:
Additional standards apply to all organizations, regardless of media type:
To claim the credit, the journalists employed must meet these standards:
Broad support and advocacy
As of this writing, the bill got the 54 votes necessary Monday for a supermajority in the Assembly, with the leadership not only of Assemblymember Christopher M. Ward but also Assemblymember Buffy Wicks, another champion of local news. Coauthored in the senate by Senator Jerry McNerny, the chair of the Revenue and Tax Committee, it received a 29-10 floor vote on Sunday.
The legislation gathered a historically broad media coalition of support in California history, including small and large publishers, ethnic media, labor unions and local TV stations. Associations that endorsed the legislation include:
In addition, many individual publications endorsed the bill, including The LA Local, Lookout Local, Cityside Journalism Initiative, The Sacramento Observer, CalMatters, La Opinion, Hispanic LA, Napa Valley Register and many more.
Have additional questions about the Community NEWS Act? Check out the Frequently Asked Questions (FAQ) section that follows.
How can a tax credit provide that much money, especially if the news organization is not paying that much in taxes?
This is a “refundable tax credit” which is actually radically different from a plain old “tax credit.” With a regular tax credit, if you paid $5,000 in taxes, a $20,000 credit would enable you to wipe out that $5,000, but no more. With a refundable tax credit, you get the full $20,000 value regardless of your tax liability.
Is this available for nonprofits news organizations too?
Yes. Because it's a refundable tax credit, it doesn’t matter how much you paid in taxes. This did require some very in-the-weeds policy wonkery to hone the mechanics (thank you to our senior policy manager, Gene Perry, and the folks at the California Franchise Tax Board). A likely path FTB may select for nonprofit news organizations to receive AB 2222 credits is related to how tax-exempt organizations are already required to file a return and pay taxes if they generate income from business activities unrelated to their exempt purpose. (For example, some nonprofit news outlets may sell some advertising and pay unrelated business income taxes on that revenue.) AB 2222 could allow nonprofit organizations to trigger the refundable credits by filing this unrelated business income form and receive the credit based on that filing, even if they report zero unrelated business income. By using an already existing form, California tax officials say they could implement the credit for nonprofits without significant added administrative costs. But the final method will be subject to the administrative implementation process, which Rebuild Local News would closely monitor.
Why was this supported by small news outlets?
Rebuild Local News has worked with small news outlets for several years to ensure that it robustly helps small publishers, ethnic media and startups, not just well-established media.
The most important point is that by running this through the tax code, it’s a much simpler process for small publications than if they had to fill out a grant application to a foundation or government board of experts. They just fill out the form and submit. In Illinois, which did a smaller version of the program, 60% of recipients had six or fewer employees, indicating that it really was able to help smaller publishers.
We heard from many small publishers that basing the bill on just full-time W-2s would undervalue their editorial operations. So, we made a few changes. First, we provided eligibility for part-time employees. We made clear that sole proprietors were eligible, even if they were not filing as W-2 employees, so “mom and pop” operations are eligible for the credit. We also structured the credit so that benefits are supersized for the first five employees, meaning the average per-employee benefit will be higher for smaller outlets than for larger ones.
To help startups, we made the program available for those outlets that have been around for one year (some laws have required three years).
Why is it supported by bigger outlets?
The bigger outlets, including TV stations and larger metro newspapers, appreciated that there is no cap on the number of eligible employees. This means that, even if a newspaper has 100 employees, they would have a powerful financial incentive to add more journalists.
Does this potentially support media like NPR or Fox News?
This is for local news, not national news. So, the Fox News Network and NPR are not eligible.
However, there is no ideological test — and that’s crucially important. That means that a Fox local TV affiliate might benefit, as could a local public radio station, or Rupert Murdoch’s California Post, provided they meet the bill’s objective criteria. We view this as a feature, not a bug. Efforts to support local news must embrace the idea that local news should be supported without government officials micromanaging the content. The key is they only get it for local reporters covering California communities. And it’s available to all comers, regardless of political persuasion.
Could some of the money go to news outlets owned by hedge funds or big corporate chains?
Yes, that could happen. Although we fully understand the problems there, we designed the bill to create incentives for positive behavior no matter the business model. If a hedge fund fires all the reporters, they lose all their tax credits. If they add reporters, they can gain. We’re not naive. Money is fungible and could flow back to investors. But on the other side of the ledger, this approach financially rewards investment in journalism and has a sound theoretical backing. In traditional marginal economics, when the costs of production are lowered, profits can be increased by increasing output — by hiring more journalists and doing more journalism. This is why the journalist unions who frequently fight with financially backed news companies are among this bill’s strongest supporters.
How does this protect editorial independence?
You can see that the criteria we mentioned above are all content-neutral. We don’t say the news outlets have to be doing certain topics or causes (other than covering “local communities”). We tried to make the criteria as objective and numerical as possible.
But there’s something more subtle. This is an open-ended tax credit, meaning that news organizations will not have to traipse up to the legislature each year asking lawmakers for financial support. The program sunsets after five years (unless renewed), and until then it doesn’t require justification before the legislature. We understand that journalists normally welcome supervision and accountability, but when it comes to government efforts to support local news outlets, there’s a countervailing interest — an independent press. So, we strongly prefer the hands-off approach.
How does this help in pure news deserts?
With a little bit of creativity from news entrepreneurs and philanthropy, this actually can lead to new outlets being created in the worst news deserts. Because this is a guaranteed benefit, an investor or donor would know that investment in a startup would get a “match” from the state.
If a foundation wants to pay for half the salary of five reporters in a news desert, they could do so knowing they’d get $100,000 in matching public support. Indeed, creative foundations can construct donation or lending strategies around news outlets that want to take full advantage of the tax credits.
When does the law go into effect?
It’s not a law yet! Governor Newsom has to sign it. He has not expressed a view on this yet, and his Finance Department does not like that AB 2222 was not negotiated as part of the overall California budget. So, if you like this bill, let him know. The law would go into effect for tax years beginning Jan. 1, 2027, meaning that it would take some time after enactment for funds to actually arrive for news organizations.
How is this being paid for?
When the federal government makes tax changes, state governments have the option to bring their tax policy in “conformance” with the federal changes. In President Trump’s Big Beautiful Bill, there was a provision limiting how much a company can deduct from their business taxes for the highest paid executives’ compensation above $1 million (including stock option value). In AB 2222, the California Legislature decided to change its own code to match the new federal law. The state estimates that the change will generate $29 million for the state’s general fund in the 2026-27 year and $58 million in the second year, more than enough to pay for the journalist employment credits.
How is a “new hire” defined?
A new journalism position is a net increase in qualifying journalist headcount between two taxable years. The organization calculates the number of qualifying journalists they have employed in the taxable year they are applying for and the prior year. Because the calculation uses total headcounts of journalists who have been employed full-time for more than 26 weeks, this approach ensures that seasonal hiring and routine turnover do not count as a new position.
What safeguards prevent abuse or “pink slime” sites from claiming credits?
The program relies on objective, verifiable standards rather than government editorial judgment. 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 FCC registration for broadcasters, USPS Periodicals permits for print, and audience data for digital outlets — provide further verification. These standards are designed to screen out bad actors without giving any government official discretion over editorial content.
Does receiving the credit affect other grants, donations or public funding?
No. 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 small nonprofit 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 to cover the local school board.
How can other states do this?
Rebuild Local News has created model legislation that’s quite similar to the bill just passed by the California legislature. Versions of this have also been enacted in Illinois, New Mexico and New York.
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