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.


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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.