AB 1431 California Assembly · 2025-2026 Regular Session

Personal income taxes: credit: medical services: rural areas.

Summary

The Personal Income Tax Law allows various credits against the taxes imposed by that law. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against the taxes imposed by that law to a qualified taxpayer in an amount equal to the qualified income earned by the qualified taxpayer for medical services, as defined, performed in a rural area in the state, not to exceed $5,000 per taxable year, as specified. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

Bill status failed 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 21, 2025 Last action Feb 2, 2026

Maddy AI version diff · 2 comparisons

What changed between versions

04/28/25 - Amended Assembly → AB1431 · 3 edits

MINOR

The final version of AB 1431 shortens the tax credit period and broadens the definition of qualifying income. The credit now applies to taxable years beginning on or after January 1, 2026 (previously 2025) and before January 1, 2031 (previously 2032), reducing the available window from seven years to five. Additionally, 'qualified income' was expanded from 'moneys paid by an employer' to 'monetary compensation paid to a qualified taxpayer,' which could include self-employment and other non-wage compensation for rural medical services.

TIMELINE

The credit's effective start year changed from January 1, 2025 to January 1, 2026, delaying when providers can begin claiming the credit by one year.

The credit's end date changed from before January 1, 2032 to before January 1, 2031, shortening the total available credit period from seven taxable years to five.

DEFINITION

The definition of 'qualified income' was broadened from 'moneys paid by an employer' to 'monetary compensation paid to a qualified taxpayer.' This removes the requirement that payment come specifically from an employer, potentially including self-employment income, contract payments, or other forms of compensation for rural medical services.

02/21/25 - Introduced → 04/28/25 - Amended Assembly · 7 edits · Apr 28, 2025

MODERATE

The amended version shortens the credit period from 7 years (2025-2031) to 5 years (2026-2030), adds a new definition of 'medical services' that excludes telehealth and elective cosmetic procedures, broadens 'qualified income' beyond employer payments, and adds detailed performance indicators and a mandatory Franchise Tax Board report due by January 1, 2030.

TIMELINE

The credit period was shortened from taxable years beginning on or after January 1, 2025 and before January 1, 2032 (7 years) to taxable years beginning on or after January 1, 2026 and before January 1, 2031 (5 years). The repeal date correspondingly moved from December 1, 2032 to December 1, 2031.

DEFINITION

A new definition of 'medical services' was added, covering diagnosis, treatment, and prevention of illness, injury, or other physical or mental conditions performed by a qualified taxpayer who is physically present while providing those services. Examples include doctor visits, hospital care, surgeries, mental health therapy, and rehabilitative treatments.

'Qualified income' was changed from 'moneys paid by an employer to a qualified taxpayer' to 'monetary compensation paid to a qualified taxpayer,' removing the requirement that payment come specifically from an employer and broadening the types of qualifying compensation.

The definition of 'physician and surgeon' was clarified by adding the word 'licensed' - changing from 'A physician and surgeon pursuant to Chapter 5' to 'A physician and surgeon licensed pursuant to Chapter 5.'

SCOPE

Two exclusions were added to the 'medical services' definition: elective cosmetic procedures and telehealth services are not eligible for the credit.

ENFORCEMENT

A new reporting requirement was added: on or before January 1, 2030, the Franchise Tax Board must submit a report to the Legislature detailing the total dollar amount of tax credits allowed and the number of taxpayers who received a credit under this section.

REQUIREMENT

Detailed performance indicators were added to satisfy Section 41 compliance: (1) total dollar amount of tax credit allowed, and (2) number of taxpayers allowed a tax credit. The legislative findings were restructured to state both the purpose/goal and these specific indicators.

Floor votes

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Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Feb 2, 2026

Lower · Passed

From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

lower

May 5, 2025

Lower · Passed

In committee: Set, second hearing. Held under submission.

lower

Apr 29, 2025

Committee

Re-referred to Com. on REV. & TAX.

lower

Apr 28, 2025

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.

lower

Apr 7, 2025

Committee

In committee: Set, first hearing. Referred to REV. & TAX. suspense file.

lower

Mar 13, 2025

Committee

Referred to Com. on REV. & TAX.

lower

Feb 22, 2025

Lower · Passed

From printer. May be heard in committee March 24.

lower

Feb 21, 2025

Introduced

Introduced. To print.

lower

1 primary · 0 co-sponsors