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CSTC works closely with a Legislative Consultant to keep an eye on important bills that would affect taxpayers and small business owners. The Legislature reconvened on January 2, the second of a two-year session. Already, an important milestone has come and gone: January 19 was the date by which the remaining 2023 bills must have passed their relevant committee. January 31 marks the deadline for 2023 bills to pass out of their house of origin if they are to continue. January is also the month when many legislators finalize their bill packages, as all bills must be introduced by February 16. Click here to find your California Representative Income Tax AB 1860 (Bauer-Kahan) | In the Assembly Committee on Revenue & Taxation Topic: Personal Income Tax Law: exclusions: student loan debt Summary: For taxable years 2024-2028, this bill would exclude qualified discharge of indebtedness income from gross income, meaning, income that would otherwise be realized from the discharge of student loan debt or medical debt that is discharged by a qualifying nonprofit organization. AB 1865 (Patterson) | In the Assembly Committee on Revenue & Taxation Topic: Personal income taxes: exclusion: deduction: homeownership savings accounts Summary: For taxable years 2024-2028, this bill would allow a deduction, not to exceed specified amounts, of the amount a qualified taxpayer contributed in any taxable year to a homeownership savings account and would exclude from gross income any income earned on the moneys contributed to a homeownership savings account. AB 1867 (Sanchez) | In the Assembly Committee on Revenue & Taxation Topic: Personal Income Tax Law: deductions: homeowners’ insurance premiums Summary: For taxable years beginning 2024-2028, this bill allows as a deduction the amount paid or incurred by a taxpayer during the taxable year as premiums on a homeowners’ insurance policy on the taxpayer’s primary residence. AB 1973 (Lackey) | In the Assembly Committee on Revenue & Taxation Topic: Personal Income Tax Law: Corporation Tax Law: Bobcat Fire: exclusions Summary: For taxable years 2020-2028, this bill provides an exclusion from gross income for any qualified taxpayer for amounts received in settlement for costs and losses associated with the 2020 Bobcat Fire in the County of Los Angeles AB 2524 (Ward) | Referred to the Assembly Committee on Revenue & Taxation Topic: Personal Income Tax Law: deferred compensation: exclusions: long-term qualified tuition program Summary: Exempts from gross income distribution made from a long-term qualified tuition program during the taxable years beginning on or after January 1, 2024, that are paid in a direct trustee-to-trustee transfer to a Roth IRA, and would conform state tax law to those changes relating to federal law. AB 2616 (Lee) | Introduced on February 14 Topic: Personal income tax: mortgage interest deduction Summary: Disallows the mortgage interest deduction on secondary homes. Appears to be a re-introduction of Mr. Lee’s 2021 bill, AB 946, that did not pass the Assembly. SB 230 (Seyarto) | Passed Senate committees, to the Assembly Topic: Income tax: health savings accounts Summary: Allows similar tax deduction treatment of Health Savings Accounts under state law that applies under federal law SB 911 (Seyarto) | In the Senate Committee on Military and Veteran’s Affairs; passed Revenue & Taxation Topic: Income taxation: exclusion: military survivor benefits Summary: This bill would provide an exclusion from gross income for survivor benefits or payments, not to exceed $20,000 per taxable year, received during the taxable year, under the federal Survivor Benefit Plan. SB 927 (Dahle) | In the Senaate Appropriations Committee; passed Revenue & Taxation Topic: Income taxes: gross income exclusions: state of emergency: natural disaster settlements Summary: This bill would provide an exclusion from gross income for amounts received in settlement by a taxpayer to replace property damaged or destroyed by a natural disaster that was declared a state of emergency by both the Governor and the President of the United States SB 1102 (Nguyen) | Referred to Senate Committee on Revenue & Taxation Topic: Personal Income Tax Law: Corporation Tax Law: oil spill: exclusions Summary: Provides an exclusion from gross income for any qualified taxpayer for amounts received in settlements associated with the October 2, 2021, oil spill that occurred off the coast of the County of Orange near the City of Huntington Beach. The bill would repeal these provisions on January 1, 2029. SB 1135 (Limón) | Referred to Senate Committees on Revenue & Taxation and Natural Resource & Wildlife Topic: Greenhouse Gas Reduction Fund: income taxes: credit Summary: In part, for taxable years 2025-2035, this bill would allow a tax credit for each taxable year in an amount equal to amounts paid or incurred during the taxable year for the application of compost on agricultural lands, ranchlands, or rangelands to improve soils, sequester carbon, and reduce greenhouse gas emissions. SB 1172 (Grove) | Introduced on February 14 Topic: Personal income tax A spot bill, with no substance yet. SB 1192 (Portantino) | Referred to the Senate Committee on Revenue and Taxation Topic: Personal Income Tax Law: Small Business Relief Act: elective tax Summary: Extends, from 2026 to 2028, the Small Business Relief Act, which authorizes a partnership or “S” corporation that meets certain other requirements to elect to pay an elective tax at a rate based on its net income for the taxable year. Tax Returns SB 1059 (Bradford) | Introduced on February 8 Topic: Cannabis tax: cannabis retailers A spot bill, with no substance yet. Tax Credits SB 952 (Dahle) | Referred to the Senate Committee on Revenue and Taxation Topic: Personal income taxes: Fire Safe Home Tax Credits Act Summary: Provides tax credits for homeowners who fire-harden their homes by clearing vegetation Taxation Generally AB 2979 (Fong) | Introduced on February 16 Topic: Income taxation: exclusion: victim compensation A spot bill with the intention to exclude from gross income compensation received from the California Victim Compensation Board. AB 3259 (Wilson) | Introduced on February 16 Topic: Taxation A spot bill, with no substance yet. Workers’ Compensation and Classification AB 1928 (Sanchez) | In the Assembly Committee on Labor & Employment Topic: Worker classification: employees and independent contractors Summary: Would repeal 2019’s AB 5, which re-classified some independent contractors as employees AB 1870 (Ortega) | Referred to the Assembly Insurance Committee Topic: Notice to employees: legal services Summary: Requires the currently mandated notice related to workers’ rights to also include information concerning an injured employee’s ability to consult an attorney to advise them of their rights under workers’ compensation laws. AB 3066 (Holden) | Introduced on February 16 Topic: Workers’ compensation: privacy. A spot bill, with no substance yet SB 1205 (Laird) | Referred to the Senate Committee on Labor, Public Employment & Retirement Topic: Workers’ compensation: medical benefits Summary: This bill would make an employee who is working entitled to receive all reasonable expenses of transportation, meals, and lodging incident to receiving treatment, in addition to one day of temporary disability indemnity, or a percentage of one day of temporary disability indemnity representative of the percentage of the wages lost receiving treatment. Other Tax-Related Bills SB 1436 (Allen) | Referred to the Senate Committees on Revenue & Taxation and Government Organization Topic: California Department of Tax and Fee Administration Board: Office of Tax Appeals Board Summary: Adds three new offices to the Government Operations Agency: the California Department of Tax and Fee Board, the Office of Tax Appeals, and the Office of Tax Appeals Board. Each office would have different responsibilities related to improving tax-related policies, overseeing policy direction, and working to create a more efficient, just, and responsive tax system. SB 1501 (Glazer) | Introduced on February 16 Topic: Corporation Taxes A spot bill, with no substance yet. |