Assembly BillFailedBusiness and Professions
AB 796: Social media platforms: advertising: tax.
What AB 796 does, verified February 3, 2026
A new tax will be imposed on social media platforms to fund various purposes. The tax will be a percentage of the annual gross receipts from programmatic advertising on the platform. The revenue will be collected by the California Department of Tax and Fee Administration. The funds will be deposited into a new trust fund, which will have separate accounts for education, mental health care, research and development, and social services. The money in the fund will be continuously appropriated for these purposes.
Bill journey
✓IntroducedComplete
2In CommitteeCurrent
3First Chamber FloorPending
4Second ChamberPending
5GovernorPending
6ChapteredPending
Last action: From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. (2026-02-02)Alert me
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| Feb. 02, 2026 | From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. |
| Jan. 31, 2026 | Died pursuant to Art. IV, Sec. 10(c) of the Constitution. |
| Jan. 12, 2026 | In committee: Held under submission. |
| Jan. 12, 2026 | In committee: Set, second hearing. Referred to REV. & TAX. suspense file. |
| Jan. 06, 2026 | Re-referred to Com. on REV. & TAX. |
Latest bill textAmended version, January 5, 2026 · 2,671 words
| Amended IN Assembly January 05, 2026 |
| Amended IN Assembly March 28, 2025 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 796
| Introduced by Assembly Member Lowenthal |
February 18, 2025 |
An act to add and repeal Division 11 (commencing with Section 29000) of to the Business and Professions Code, and to add and repeal Part 27 (commencing with Section 51000) of to Division 2 of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 796, as amended, Lowenthal. Social media platforms: advertising: tax.
Existing law imposes various taxes, including a tax on income, the gross receipts from the sale of tangible personal property, and real property.
This bill would, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would impose a tax on a social media platform provider, as defined, equal to an unspecified percentage of the annual gross receipts derived from the purchase of advertisements programmatic advertising for distribution on the provider’s social media platform, as provided. The bill would require the California Department of Tax and Fee Administration to administer the tax pursuant to the Fee Collection Procedures Law, the violation of which is a crime. By extending the application of the Fee Collection Procedures Law, this bill would impose a state-mandated local program.
This bill would create the Social Media Safety Trust Fund within the State Treasury and would require all moneys raised pursuant to these taxes be deposited into the fund. The bill would establish various accounts within the fund and would allocate moneys into those accounts for expenditure according to specified purposes, including an Education Account, Mental Health Care Account, Research and Development Account, and Social Services Account. The bill would continuously appropriate the moneys in the fund to administer those provisions. The bill would repeal these provisions on January 1, 2031.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The people of the State of California do enact as follows:
SECTION 1.
The Legislature finds and declares all of the following:(a) The Tenth Amendment to the United States Constitution reserves to the states all powers not delegated to the federal government, including the authority to regulate taxation and commerce within their borders.
(b) A social media platform subject to taxation under this act directly contributes to economic, social, and regulatory burdens on the state, including, but not limited to, all of the following:
(1) Public health and safety concerns, including increased costs related to law enforcement, mental health interventions, educational services, and consumer protection.
(2) Regulatory compliance burdens, including the need for additional oversight and enforcement to mitigate harms caused by the social media platform.
(3) Economic and infrastructure costs, including increased reliance on publicly funded resources to counteract adverse effects generated by the social media platform.
(c) The United States Supreme Court has upheld state taxation authority on commerce that has a substantial nexus to the state and recognized that states have the power to impose taxation on out-of-state businesses if there is sufficient connection to the state’s economy, regulatory framework, or public interest.
(d) Social media advertising constitutes a distinct service that is exclusive to digital platforms and cannot be replicated by traditional media, as it relies on proprietary algorithmic targeting and ongoing user data aggregation, which make it fundamentally different from any other advertising medium, including traditional print, television, radio, and outdoor advertising. Because the tax applies broadly to in-state social media advertising transactions, it is not a discriminatory tax on internet-based commerce, but rather a neutral, service-specific sales tax that ensures fair contribution to the regulatory and economic costs imposed on the state.
(e) Accordingly, the state retains its sovereign authority to impose a sales tax on the specified internet-based social media platform, as this taxation is a lawful exercise of the state’s taxation power to mitigate the financial and social costs imposed on the people of California through a unique, distinct service.
(f) Dangers including cyberbullying, human trafficking, fraud, illegal drug distribution, sexual harassment, sexual assault, self-harm, anxiety, depression, and violence that are caused, perpetrated, facilitated, or exacerbated through the use of social media platforms have caused significant and pervasive harm to California residents under 18 years of age. California taxpayers have incurred substantial costs in attempts to address these harms through numerous responses, including social work, mental health support, health care, and law enforcement.
(g) It is the intent of the Legislature to establish a program for the purposes of promoting, supporting, and improving the protection, resilience, and recovery from the harms caused, facilitated, or exacerbated by adolescent social media use. It is the intent of the Legislature that these purposes be accomplished through the support of existing and new resources and programs emphasizing awareness, education, social services, health care, and research.
SEC. 2.
Division 11 (commencing with Section 29000) is added to the Business and Professions Code, to read:DIVISION 11. Social Media Platform Advertising
CHAPTER 1. General Provisions and Definitions
29000.
This division shall be known as the California Social Media Accountability Act.29010.29001.
(a) “Social media platform” means a public or semipublic internet-based service or application that has users in California and that meets both of the following criteria:
(1) (A) A substantial function of the service or application is to connect users in order to allow users to interact socially with each other within the service or application.
(B) A service or application that provides email or direct messaging services shall not be considered to meet this criterion on the basis of that function alone.
(2) The service or application allows users to do all of the following:
(A) Construct a public or semipublic profile for purposes of signing into and using the service or application.
(B) Populate a list of other users with whom an individual shares a social connection within the system.
(C) Create or post content viewable by other users, including, but not limited to, on message boards, in chat rooms, or through a landing page or main feed that presents the user with content generated by other users.
(b) “Fund” means the Social Media Safety Trust Fund established pursuant to Section 29100. 29005.
CHAPTER 2. Social Media Safety Accountability Program
29100.29005.
29110.29006.
(b) All grants, gifts, or bequests of money made to or for the benefit of the fund from public or private sources to be used for social media safety programs shall be deposited in the fund and expended for the specific purpose for which the grant, gift, or bequest was made in compliance with this division.
29120.29007.
(1) ____ percent shall be deposited into the Education Account for expenditures to ensure the public is educated on how to mitigate the risks of adolescent social media platform use, including, but not limited to, the delivery of evidenced-based social media platform safety curriculum to children, caregivers, and educators. Upon appropriation by the Legislature, the Superintendent of Public Instruction may provide grants from the Education Account to school districts or elementary or secondary schools to support these purposes. Grant funds may be used by grantees to contract with entities specializing in the delivery of social media platform safety educational services.
(2) ____ percent shall be deposited into the Mental Health Care Account for expenditures to ensure that children and their caregivers receive appropriate mental health care services and support for mental health risks associated with adolescent social media platform use, including, but not limited to, anxiety, depression, eating disorders, and self-harm. Upon appropriation by the Legislature, the State Public Health Officer may provide grants from the Mental Health Care Account to any entity employing a duly licensed mental health care provider to support these purposes.
(3) ____ percent shall be deposited into a Research and Development Account for expenditures to ensure that research of best practices for all programs and services relating to adolescent social media safety and to advance the public’s understanding of social media platform safety and expenditures to ensure development of technology to protect children from the dangers associated with social media platform use. Upon appropriation by the Legislature, the State Public Health Officer may provide grants to any entity conducting research or development of this type.
(4) ____ percent shall be deposited into a Social Services Account for expenditures to ensure that children harmed through using social media platforms, including, but not limited to, cyberbullying, sexual predation, and human trafficking, receive appropriate social services and at-risk youth, including, but not limited to, foster youth receive appropriate social services to prevent, mitigate, and respond to harms relating to adolescent social media platform use. These funds shall also be allocated to support community-based organizations that provide youth behavioral health primary prevention services and after school programs aimed at reducing the risks associated with adolescent social media platform use. Upon appropriation by the Legislature, the Director of Social Services may provide grants to any entity providing these services.
(b) Any moneys appropriated to any of these accounts that are not encumbered or expended within the period prescribed by Section 16304 of the Government Code shall, together with the accrued interest on the amount, revert to and remain in the same account for the next fiscal period.
This division shall remain in effect only until January 1, 2031, and as of that date is repealed.
SEC. 3.
Part 27 (commencing with Section 51000) is added to Division 2 of the Revenue and Taxation Code, to read:PART 27. Social Media Platform Advertising Tax Law
CHAPTER 1. General Provisions and Definitions
51000.
For purposes of this part:(a)“Advertisement” means a paid message or posting, including video, text, illustration, or audio, which is rendered in exchange for consideration and is disseminated by a social media platform provider by means of a social media platform in any manner, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase of a commercial product or service.
(a) “Department” means the California Department of Tax and Fee Administration.
(b) “Programmatic advertising” means a method of purchasing media or advertisements that meets all of the following criteria:
(1) The method uses technology to automate and optimize, in real time, the purchasing process.
(2) The method serves targeted and relevant experiences to a consumer across channels.
(3) The method uses algorithms to filter advertising impressions derived from consumer behavioral data to allow advertisers to define budgets, goals, and attribution and to optimize for reduced risk while increasing return on investment.
(b)
(c) “Social media platform” or “platform” means a public or semipublic internet-based service or application that has users in California and that meets both of the following criteria:
(1) (A) A substantial function of the service or application is to connect users in order to allow users to interact socially with each other within the service or application.
(B) A service or application that provides email or direct messaging services shall not be considered to meet this criterion on the basis of that function alone.
(2) The service or application allows users to do all of the following:
(A) Construct a public or semipublic profile for purposes of signing into and using the service or application.
(B) Populate a list of other users with whom an individual shares a social connection within the system.
(C) Create or post content viewable by other users, including, but not limited to, on message boards, in chat rooms, or through a landing page or main feed that presents the user with content generated by other users.
(c)
(d) “Social media platform provider” or “provider” means a person who, for commercial purposes in or affecting commerce, provides, manages, operates, or controls a social media platform.
51010.51001.
(b) All moneys raised pursuant to taxes imposed by Section 51100 51005 shall be appropriated and expended only for the purposes expressed in the Social Media Safety California Social Media Accountability Act (Division 11 (commencing with Section 29000) of the Business and Professions Code) and shall be used only for new services or to supplement existing levels of service and not to fund up to preexisting levels of service. No moneys in the Social Media Safety Trust Fund shall be used to supplant state General Fund money for any purpose.
51002.
The department shall administer and collect the tax imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the tax imposed by this part, and references to “feepayer” shall include a person required to pay the tax imposed by this part.CHAPTER 2. Imposition of Tax
51100.51005.
(b) The gross receipts used to calculate the amount of tax due under subdivision (a) shall include only purchases that originate in California or purchases for advertisements programmatic advertising distributed to persons residing in California.
(c) The gross receipts used to calculate the amount of tax due under subdivision (a) shall not include the cost of programmatic advertising services that the social media platform provider refunds either in cash or credit.
(d) The gross receipts used to calculate the amount of tax due under subdivision (a) shall not include purchases that meet either of the following criteria:
(1) The purchaser is a nonprofit organization that qualifies for exempt status under Section 501(c)(3) of the United States Internal Revenue Code of 1986.
(2) The purchaser’s aggregate gross payments to the social media platform provider for advertisements within the calendar year has not exceeded one hundred thousand dollars ($100,000).
This part shall remain in effect only until January 1, 2031, and as of that date is repealed.
51009.
This part does not grant or alter any authority related to the collection, access, or use of any information associated with a user or their geolocation.SEC. 4.
Nothing in this act is intended to infringe upon any right to exercise free expression protected under the First Amendment to the United States Constitution or under Section 2 of Article I of the California Constitution.SEC. 5.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.Text of AB 796 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions