Key Takeaway:
AB 1175 allows qualified out-of-state CPAs to practice in California without obtaining a CA license, provided their home state meets equivalency standards. It modernizes education requirements, clarifies interstate mobility, and makes remote work compliant. Forming a California accountancy corporation still provides major credibility, tax, liability, and operational advantages.
California is entering a new era for certified public accounts (CPAs) with the passage of Assembly Bill 1175. It is modernizing the state’s CPA pathway both for candidates and out-of-state licensees through improved educational requirements and mobility framework.
Whether you serve California clients now or are exploring expansion into one of the country’s lucrative economies, AB 1175 clears a new path for you.
And that leads to the questions: What does AB 1175 really mean for out-of-state CPA practice in California? Why forming an accountancy corporation in California might be your next smart move?
How AB 1175 Modernizes CPA Licensure Requirements and Out-of-State Mobility
Assembly Bill 1175, signed in October 2025, represents the most significant update to California’s CPA licensing laws in decades. Sponsored by the California Board of Accountancy (CBA), the bill:
- Modernizes education and experience requirements, including reduced bachelor’s degree units.
- Aligns California with national CPA mobility standards through a CPA = CPA model.
- Eliminates barriers that previously hindered the CPA pipeline, such as restrictive education and experience requirements.
- Expands the ability for out-of-state CPAs to legally operate in California through the same CPA = CPA model.
When Does AB 1175 Take Effect?
The law becomes effective January 1, 2026. But the changes in California CPA licensure requirements will be implemented beginning January 1, 2027.
This transition period gives universities, employers, and aspiring accountants time to adapt their programs and expectations.
What’s Next in Implementing AB 1175?
Now that AB 1175 is law, the CBA will submit a regulatory package to implement and clarify its provisions. This process includes drafting, proposing, and adopting regulations that translate the bill’s text into specific administrative rules.
These regulatory developments will be available for public review. Stakeholders — including educators, employers, and licensees — are encouraged to follow along and provide input during the rulemaking phase.
Here’s what the rollout looks like:
- January 1, 2026: AB 1175 becomes state law
- 2026: CBA drafts and publishes regulatory packages
- January 1, 2027: New licensure requirements officially apply
You can follow the progress in proposed regulations through the official CBA website.
How Can You Prepare for the Changes?
While the new requirements don’t take effect until 2027, now is the time for strategic planning:
- Students should work with their advisors to plan coursework under the updated education model.
- Employers may want to review their training programs to align with the expanded experience options.
- Out-of-state firms should confirm that their home state licensure standards meet California’s new mobility criteria.
By preparing early, both individuals and organizations can ensure a smooth transition when the new rules take effect.
What’s Changing in CPA Education & Experience Requirements
The regulations to be implemented based on AB 1175 will still go through drafting and public consultations. But the positive changes are already clear for CPA candidates and out-of-state licensed CPAs.
California CPA Requirements Changes for a More Accessible Pathway: Revised Educational Requirements
CPA candidates have been required to complete 150 semester units, often adding a fifth year of college coursework beyond a bachelor’s degree. It’s costly and time-consuming, causing delays for students to start their profession.
AB 1175 is eliminating these barriers.
Beginning in 2027, CPA candidates are only required to have:
- A 120-unit bachelor’s degree with an accounting concentration
- Two years of general accounting experience
- Passing the Universal CPA Exam
This shift removes financial and educational friction, strengthening the pipeline and creating a new environment for both in-state and out-of-state CPAs.
Why was the 150-unit requirement removed?
The decision to remove the 150-hour rule was driven by concerns over cost and accessibility.
Many candidates found the extra 30 units — often unrelated to core accounting competencies — to be an expensive and time-consuming hurdle. The CBA and other stakeholders recognized that this fifth year could create a barrier to entry for talented students from diverse socioeconomic backgrounds.
By returning to a 120-unit bachelor’s degree model paired with meaningful professional experience, California aims to maintain high standards while expanding access to the profession.
Accounting Experience Requirements Made Broader and More Flexible
The old system tied qualifying experience primarily to public accounting roles under supervised work under a licensed CPA.
AB 1175 opens the door to a wider range of accounting experience, provided they meet CBA standards, including:
- Industry
- Government
- Education
- Other CBA-approved accounting roles
These changes reflect the modern reality of diverse accounting careers. And with more options for accounting experience, younger professional and mis-career accountants will see licensure as more attainable and appealing.
How will these changes affect the supply of CPAs in California?
California, like the rest of the nation, faces a declining pipeline of candidates. And these changes are expected to increase the number of qualified CPAs entering state’s workforce, which would solve that observed across the country.
By modernizing both education and experience pathways, the state hopes to strengthen the profession’s future and ensure that consumers continue to have access to competent, ethical, and well-trained CPAs.
‘CPA = CPA’ Model: Interstate Mobility & Reciprocity Under AB 1175
Can an out-of-state CPA practice in California? With AB 1175, yes you can.
This is the most transformative shift for out-of-state professionals. Under AB 1175, California adopts a model similar to how driver’s license is treated across states. It means:
If you’re licensed in another U.S. jurisdiction, you will be able to practice in California without obtaining a separate CPA license—if your home state meets California’s consumer-protection standards.
Simply put, this change under the California Assembly Bill 1175 means the state recognizes that accounting has become increasingly national and digital.
Under the new mobility structure:
- Out-of-state CPAs can legally practice in California without undergoing the California licensure process
- Remote work across state lines is now clearly permissible
- Multistate firms gain operational flexibility
- CPAs can support California clients while remaining headquartered elsewhere
This new flexibility enhances the state’s ability to attract qualified professionals while the CBA maintains oversight. California Assembly Bill 1175 also clarifies that if another state fails to meet its regulatory obligations later on, the CBA can remove that state from the no-notice mobility program.
Why is mobility reform important for the CPA profession and consumers?
Many firms serve clients across multiple states or provide virtual services that cross state lines.
Mobility reform ensures that qualified CPAs can meet client needs efficiently without redundant red tape. At the same time, it safeguards the public by giving the CBA clear authority to monitor compliance and take corrective action when necessary.
This balance of access and accountability helps both businesses and consumers — encouraging economic growth while maintaining the profession’s integrity.
How AB 1175 Expands Opportunity for Out-of-State CPA Practice in California
For the first time, California’s regulatory structure explicitly welcomes qualified CPAs from other jurisdictions to practice in the state with greater flexibility. With mobility clarified, out-of-state CPAs now benefit from:
- Immediate Access to California Clients: Serve individuals, businesses, startups, and corporations without worrying about redundant red tape.
- Legitimize Remote Advisory Work: Offer tax planning, consulting, compliance, virtual CFO services, and more from anywhere.
- Market Presence in a Global Economic Powerhouse: As of 2024, California—if treated as its own country—would be the fifth-largest economy globally. That alone shows how much opportunity awaits for out-of-state CPAs to launch a practice here.
However, while AB 1175 allows out-of-state CPAs to practice in California, forming a California entity offers strategic advantages worth considering.
Why Forming a California Professional Accountancy Corporation Still Matters
While AB 1175 enables non-California CPAs to practice here, forming an accountancy corporation can significantly amplify your growth and compliance strategy. Here’s why:
Establish Credibility and Access to California Clients
California clients, especially corporate and institutional ones, often prefer to engage firms that are:
- Governed by California law
- Familiar with California tax, privacy, and consumer-protection environment
- Compliant with California’s professional governance standards
Forming an accountancy corporation in California allows you to establish credibility and positions your firm as a locally aligned provider.
Full Alignment with California’s Requirements
Having a professional corporation registered with the California Secretary of State signals you’re operating within the state’s requirements for accountancy. This ensures compliance with:
- California Accountancy Act
- CBA’s naming and ownership requirements
- California’s professional ethical standards
This reduces risk and prevents regulatory conflicts.
Tax and Operational Benefits
Operating through a professional corporation means you’re separating your business assets with personal ones. And this liability protection from general business obligations is one of the reasons many licensed professionals opt for this business structure.
A properly structured professional corporation will also allow:
- Income splitting among CPA shareholders
- Deductible fringe benefits
- Efficient multistate tax structuring
- Potential separation of California-source income from other state operations
Seamless Scalability and Hiring
A California corporation makes it easier to:
- Work with California-licensed CPA partners and California-based firms
- Handle an expanding base of California clients remotely
- Comply with CA-specific corporate governance norms
Overall, this structure creates the legal and operational infrastructure to expand your accounting practice in the future.
What AB 1175 Does Not Change When Forming an Accountancy Corporation
Even with AB 1175 updates, many foundational steps for forming an accountancy corporation in California remain the same. You still must:
- Choose a compliant name with the required professional and corporate designations, as outlined in Business and Professions Code § 5060 and CA Code of Regulations, Title 16, § 75.5.
- File Articles of Incorporation with the California Secretary of State.
- Draft corporate bylaws, which should contain an appropriate passage or legend referring to ownership and shareholder restrictions, according to 16 CA Code of Regs § 75.9 and Corporations Code § 13406 to 13407.
- Obtain a Certificate of Registration from the CBA. Your accountancy corporation’s license needs to be renewed every two years.
Read our complete guide on forming your professional accountancy corporation in California.
FAQs About AB 1175’s Impact on Licensure Requirements and Out-of-State CPA Practice in California
What are the main AB 1175 changes affecting CPA licensure?
AB 1175 eliminates the 150-hour education requirement, adopts a two-year general accounting experience standard, and modernizes interstate mobility rules for out-of-state CPAs. Together, these reforms make the CPA pathway more accessible and expand the ability of out-of-state CPAs to work with California clients.
Can an out-of-state CPA practice in California under AB 1175?
Yes. Under Assembly Bill 1175, qualifying out-of-state CPAs may practice in California without obtaining a California CPA license, provided their home state meets California’s consumer-protection and licensure-equivalency standards.
When does the California AB 1175 take effect?
AB 1175 becomes law on January 1, 2026, and the updated licensure framework applies beginning January 1, 2027. Mobility provisions for out-of-state CPAs take effect when the law is enacted.
Does AB 1175 change the steps to form an accountancy corporation in California?
No. The structural steps—filing Articles of Incorporation, drafting bylaws, obtaining Certificate of Registration from the CBA, following naming rules—haven’t changed.
Will AB 1175 change the California CPA license requirements for out-of-state residents?
CPA candidates who reside outside California will also follow the new pathway, including completing a 120-unit bachelor’s degree, two years of general accounting experience, and passing the Uniform CPA Examination.
AB 1175 Sets the Stage—Now It’s Time for Out-of-State CPAs to Make a Move
Now that out-of-state CPAs can practice in California without needing a separate license, it’s the best time to act and seize the possibilities this new law creates.
Forming a professional accountancy corporation positions you to: expand your client base, build your brand in lucrative market, and operate under the protection of a well-structured business entity.
For out-of-state CPAs, we handle all the cross-jurisdictional details:
- Verifying mobility eligibility under AB 1175;
- Preparing California-compliant bylaws and ownership structures; and
- Filing with the Secretary of State and Franchise Tax Board for seamless registration.
Contact the Law Offices of Gale & Vallance at (714) 634-4838 to schedule a consultation. Let us help you turn California’s new era of opportunity into a strategic advantage for your accounting practice.
