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SB-1218 Personal income taxes: deduction: 529 college savings plans: contributions. (2017-2018)

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Date Published: 05/10/2018 09:00 PM
SB1218:v98#DOCUMENT

Amended  IN  Senate  May 10, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 1218


Introduced by Senator Gaines

February 15, 2018


An act to add Section 17206.2 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 1218, as amended, Gaines. Personal income taxes: deduction: 529 college savings plans: contributions.
The Personal Income Tax Law, in modified conformity with federal income tax laws, excludes from the gross income distributions or earnings of a beneficiary of, or a contributor to, a qualified tuition program, as provided, and contributions to a plan are not deductible in computing the income that is subject to the taxes imposed by that law.
This bill, for taxable years beginning on or after January 1, 2018, would allow as a deduction under that law the lesser of (1) the amount contributed by a qualified taxpayer, as defined, to a qualified tuition program, as specified, or (2) $20,000, $6,000 for spouses filing joint returns, heads of households, and surviving spouses, as defined, or $3,000 for a single individual or a spouse filing separately, as indexed for inflation.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17206.2 is added to the Revenue and Taxation Code, to read:

17206.2.
 (a) For taxable years beginning on or after January 1, 2018, there shall be allowed as a deduction the lesser of the amount contributed by a qualified taxpayer during the taxable year to a qualified tuition program under Section 529 of the Internal Revenue Code, relating to qualified tuition programs, as modified by Section 17140.3, or the applicable amount determined under subdivision (d).
(b) For purposes of this section, “qualified taxpayer” means an individual who, on behalf of a beneficiary, contributes money to a qualified tuition program and meets all of the other applicable requirements of Section 529 of the Internal Revenue Code, relating to qualified tuition programs, as modified by Section 17140.3.
(c) Section 67(b) of the Internal Revenue Code, relating to miscellaneous itemized deductions, is modified to additionally provide that the deduction allowed under this section is an itemized deduction that is not subject to the 2-percent floor on itemized deductions under Section 67(a) of the Internal Revenue Code, relating to general rule.
(d) (1) The amount allowed as a deduction under subdivision (a) shall not exceed twenty thousand dollars ($20,000). the following amounts:
(A) For spouses filing joint returns, heads of households, and surviving spouses, as defined in Section 17046, six thousand dollars ($6,000).
(B) For a single individual or a spouse filing separately, three thousand dollars ($3,000).
(2) For each taxable year beginning on or after January 1, 2019, the Franchise Tax Board shall recompute the deduction amount prescribed in paragraph (1) in the manner described in subdivision (h) of Section 17041.

SEC. 2.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.