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AB-1253 Personal income taxes: additional tax.(2021-2022)

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Date Published: 03/26/2021 04:00 AM
AB1253:v98#DOCUMENT

Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1253

Introduced by Assembly Members Santiago Santiago, Lorena Gonzalez, Kalra, and Lee
(Coauthors: Assembly Members Carrillo, Jones-Sawyer, and Wicks)

February 19, 2021

An act to amend Section 17733 of the Revenue and Taxation Code, relating to taxation. An act to add Section 17044 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1253, as amended, Santiago. Personal Income Tax: credits: trusts and estates. Personal income taxes: additional tax.
The Personal Income Tax Law and California Constitution impose taxes based upon taxable income of individuals, estates, and trusts at specified rates.
This bill, for taxable years beginning on or after January 1, 2021, in addition to those taxes, would impose an additional tax of at the rates of 1%, 3%, and 3.5% on that portion of a taxpayer’s taxable income over specified thresholds, as provided.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
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, including a credit for estates for $10 and trusts for $1.

This bill would make nonsubstantive changes to those provisions.

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Section 17044 is added to the Revenue and Taxation Code, to read:

17044.
 (a) For each taxable year beginning on or after January 1, 2021, in addition to any other taxes imposed by this part or the California Constitution, an additional tax shall be imposed as follows:
(1) At the rate of 1 percent on that portion of a taxpayer’s taxable income over the adjusted one-million-dollar ($1,000,000) amount, but not over the adjusted two-million-dollar ($2,000,000) amount.
(2) At the rate of 3 percent on that portion of a taxpayer’s taxable income over the adjusted two-million-dollar ($2,000,000) amount, but not over the adjusted five-million-dollar ($5,000,000) amount.
(3) At the rate of 3.5 percent on that portion of a taxpayer’s taxable income over the adjusted five-million-dollar ($5,000,000) amount.
(b) For purposes of this part and Part 10.2 (commencing with Section 18401) of Division 2, the tax imposed under this section shall be treated as if imposed under Section 17041, including, but not limited to, the application of subdivisions (b) and (e) of Section 17041, except as follows:
(1) Section 17045 shall not apply.
(2) The tax imposed under this section shall apply without any adjustments to the income thresholds specified in subdivision (a) for filing status of the taxpayer.
(c) The adjusted one-million-dollar ($1,000,000) amount, adjusted two-million-dollar ($2,000,000) amount, and adjusted five-million-dollar ($5,000,000) amount specified in subdivision (a) shall be recomputed as provided in subdivision (h) of Section 17041 of the Revenue and Taxation Code for each taxable year beginning on or after January 1, 2022.
(d) For purposes of this section the following definitions shall apply:
(1) “Adjusted one-million-dollar ($1,000,000) amount” means the amount equal to one million one hundred eighty-one thousand four hundred eighty-four dollars ($1,181,484) that is recomputed by the Franchise Tax Board as provided in subdivision (h) of Section 17041 for taxable years beginning on or after January 1, 2021, and before January 1, 2022.
(2) “Adjusted two-million-dollar ($2,000,000) amount” means the amount equal to two times the adjusted one-million-dollar ($1,000,000) amount described in paragraph (1).
(3) “Adjusted five-million-dollar ($5,000,000) amount” means the amount equal to five million nine hundred seven thousand four hundred twenty dollars ($5,907,420) that is recomputed by the Franchise Tax Board as provided in subdivision (h) of Section 17041 for taxable years beginning on or after January 1, 2021, and before January 1, 2022.

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.
SECTION 1.Section 17733 of the Revenue and Taxation Code is amended to read:
17733.

(a)An estate shall be allowed a credit of ten dollars ($10) against the tax imposed by Section 17041, less any amounts imposed by paragraph (1) of subdivision (d) or paragraph (1) of subdivision (e), or both, of Section 17560.

(b)(1)Except as provided in paragraph (2), a trust shall be allowed a credit of one dollar ($1) against the tax imposed by Section 17041, less any amounts imposed by paragraph (1) of subdivision (d) or paragraph (1) of subdivision (e), or both, of Section 17560.

(2)(A)A disability trust, as defined in Section 642(b)(2)(C) of the Internal Revenue Code, shall be allowed a credit in an amount equal to the personal exemption credit authorized for a single individual pursuant to subdivision (a) of Section 17054.

(B)The credit authorized by subparagraph (A) shall be subject to the credit reduction provisions of Section 17054.1. For purposes of making the adjustments required by Section 17054.1, the adjusted gross income of the disability trust shall be computed in accordance with Section 67(e) of the Internal Revenue Code, relating to determination of adjusted gross income in case of estates and trusts.

(C)This paragraph applies to taxable years beginning on or after January 1, 2004.

(c)The credits allowed by this section shall be in lieu of the credits allowed under Section 17054 (relating to credit for personal exemption).