Budget & Taxes (Government Spending)

The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a deduction from adjusted gross income for amounts contributed by a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define "catastrophe savings account" to mean a regular savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense. The Personal Income Tax Law, in conformity with federal income tax law, generally defines "gross income" as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would provide an exclusion from gross income for interest earned by a catastrophe savings account until December 1, 2030. Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would include findings and reporting requirements in compliance with this requirement. This bill would take effect immediately as a tax levy.

Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes. This bill would, on and after July 1, 2026, provide an exemption from the taxes imposed by the Sales and Use Tax Law for the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, hydrogen fuel, as defined. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws. This bill would provide that the exemption created by the bill does not apply to local sales and use taxes or transactions and use taxes. Existing law imposes or dedicates certain state sales and use tax rates for local funding, including through the Local Revenue Fund 2011. This bill would provide that the exemption created by the bill does not apply to those state sales and use tax rates imposed or dedicated for local government funding, including those rates for which revenues are deposited into the Local Revenue Fund 2011. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would also include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law, in modified conformity with federal law, generally defines "gross income" as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income for purposes of computing tax liability. This bill would, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, exclude from the gross income of a qualified taxpayer, as defined, for qualified overtime wages, defined to mean overtime wages paid to a qualified taxpayer in relation to work performed directly in response to, or in support of, emergency operations, as specified. Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals 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.

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 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 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 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 Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a deduction from adjusted gross income for an amount equal to the interest paid on a qualified motor vehicle loan, as defined. The bill would limit this deduction to one qualified motor vehicle loan per taxpayer. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2028, would allow a credit against the taxes imposed by those laws to a business operating in a disadvantaged community, as described, with total gross annual receipts of no greater than $5,000,000, with 25 or fewer employees in an amount equal to the taxpayer's qualified retail theft prevention measure expenses at retail locations in the state, not to exceed $4,000 per taxable year, and subject to a credit reservation by the Franchise Tax Board, as specified. The bill would limit the total amount of tax credits allocated per taxable year to $10,000,000. Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would include findings and reporting requirements in compliance with this requirement. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law, in general conformity with federal tax law, allows various deductions from gross income in calculating adjusted gross income. The Personal Income Tax Law generally applies the federal definition of adjusted gross income, but excepts the deduction allowed for certain expenses of elementary and secondary school teachers. This bill would conform with federal law for purposes of the deduction allowed for certain expenses of elementary and secondary school teachers for taxable years beginning on or after January 1, 2026, and before January 1, 2031. Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would include findings and collection requirements in compliance with this requirement. This bill would take effect immediately as a tax levy.

The Personal Income Tax Law in modified conformity with federal income tax laws, generally allows various deductions in computing the income that is subject to tax imposed under that law. This bill would, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, allow a deduction in computing income for out-of-pocket medical costs, as defined. The bill would limit the deduction to $5,000 per taxable year. 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.

The Personal Income Tax Law allows various credits against the taxes imposed by that law. This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2025, and before January 1, 2030, to a qualified taxpayer, as defined, in an amount equal to 40% of the taxpayer's qualified expenses, as defined, not to exceed $400 per taxable year, or $2,000 cumulatively. Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. The bill would also include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

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.