California
California is a leader in enacting new policies and regulations, and other states, particularly in the West and Pacific Northwest, follow California’s lead and adopt similar policies. California has over 4.15 million small businesses (SMBs) employing over 7.5 million people. Policymakers must consider the impacts of new laws and regulations on SMBs before supporting legislation.
Key Policy Issues
Digital Economy
Social Media Ads Tax
Overview: Social media advertising is one of the most affordable, effective ways small businesses can reach customers today. But California lawmakers want to pass a bill, AB 796, that would impose a new tax on social media ads.
The Problem: While AB 796 is framed as a tax on large platforms like YouTube, Instagram, and Facebook, the cost of the tax would likely be passed on to advertisers, including small businesses and growing brands.
The Impact: If AB 796 passes, it will hit small businesses the hardest. If advertising costs rise, small businesses will be forced to purchase fewer ads — leading to reduced sales and slower growth for small businesses already navigating economic headwinds.
Small Business Advocacy: If you’re a California small business owner, email your legislators and urge them to oppose AB 796 and protect small businesses like yours.
Bill sponsor: Assemblymember Josh Lowenthal
Status: AB 796 was introduced on February 18, 2025, and has been placed on suspense file.
Surveillance Pricing (CA AB 446)
Overview: California small businesses use basic data to offer promotions that help them attract customers, build loyalty, and compete with larger chains. These promotions include discounts for loyal patrons, special offers on items left in a customer’s online shopping cart, or coupons for people likely to be interested in their products or services.
The Problem: AB 446 would restrict small businesses’ ability to use basic data to offer these common promotions, making it harder for them to grow and compete.
The Impact: AB 446 could make it harder for small businesses to attract customers, offer competitive pricing, and grow — putting them at a disadvantage against national chains with larger marketing budgets.
Small Business Advocacy: Dozens of small businesses voiced their concerns about the bill by sending over 180 messages to lawmakers, signing a petition, and participating in a virtual press conference.
Bill sponsors: Assemblymember Chris Ward, Assemblymember Liz Ortega, Assemblymember Lori Wilson
Status: AB 446 was ordered to the Senate’s inactive file on September 10, 2025, at the request of Senator McNerney. Bill sponsor Assemblymember Chris Ward stated he plans to revisit it when the legislature reconvenes in January 2026.
Key Officials
California Small Business Leaders, You Can Make Your Voice Heard.
It’s crucial that small business leaders like you speak up and make your voice heard to your state’s legislators, especially when they may consider bills that impact your business. Click here to send a letter to your representatives in California urging them to consider the impacts of potential digital economy laws on SMBs before supporting such legislation.
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