California Updates CPA Licensing Rules and Expands CTEC Exemptions

California Updates CPA Licensing Rules

We’re covering two major professional regulation changes — new CPA licensing requirements and expanded exemptions from California Tax Education Council (CTEC) registration. Both measures were enacted through AB 1175 and SB 788, and they mark significant shifts for accounting and tax professionals across the state.

Easier Path to CPA Licensure Under AB 1175

Beginning January 1, 2027, new CPA applicants in California will have the option to apply under either the existing “legacy” licensing criteria or the new, simplified standards created by AB 1175.

Under the new pathway:

• Applicants need only a bachelor’s degree with an accounting concentration, eliminating the long-standing 150-semester-unit requirement.

• The accounting concentration must include:

  
  

  • 24 semester units in accounting

  • 24 semester units in business-related courses

  • 3 semester units in ethics

  • Extra accounting or ethics units may also count toward the requirement.

  
  

• Applicants must complete two years of qualifying experience, including work in accounting, tax, consulting, management advisory, or related fields.

• Up to one year of experience can be satisfied by completing a master’s degree in accounting or a California Board of Accountancy–recognized certificate or training program.

• Certificates from community colleges or extended studies programs can substitute for six months of experienceunder proposed regulations.

• All applicants must still pass the CPA exam.

The legacy requirements will be repealed January 1, 2029, after which only the new AB 1175 criteria will apply.

Interstate Mobility for CPAs

Starting January 1, 2026, CPAs licensed in other states may obtain a California license more easily if their home state’s requirements — including education, experience, and examination standards — are deemed comparable to California’s. This change improves mobility for experienced professionals relocating to the state.

New CTEC Exemptions Under SB 788

SB 788 creates new exemptions from CTEC registration for certain tax professionals, effective for 2025 tax year returns. The following individuals are now exempt from registering with CTEC before preparing or signing tax returns for a fee:

• Out-of-state CPAs practicing in California under mobility laws (practice privilege).

• Owners, partners, shareholders, and employees of accounting firms licensed by the California Board of Accountancy.

Background on CTEC Registration

Under California’s Tax Preparation Act, most individuals who prepare or assist in preparing state or federal income tax returns for a fee must register with CTEC, unless exempt. Prior exemptions applied only to:

• California-licensed CPAs,

• Active members of the State Bar of California,

• IRS Enrolled Agents, and

• Their supervised employees, provided the supervising professional signed and assumed responsibility for the return.

  Certain trust companies and financial institutions were also exempt.

The Bottom Line California Updates CPA Licensing Rules and Expands CTEC Exemptions

Together, AB 1175 and SB 788 modernize California’s professional licensing landscape.

• AB 1175 simplifies the CPA licensing process, removes barriers for qualified candidates, and enhances reciprocity with other states.

• SB 788 streamlines compliance for accounting firms and out-of-state CPAs by reducing redundant CTEC registration requirements.

These updates take effect in stages beginning 2025 through 2029, and professionals should begin preparing for the transition now.

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