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AB-26 Personal Income Tax Law: exclusion: federal student loan debt relief plan.(2023-2024)



Current Version: 04/20/23 - Amended Assembly

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AB26:v97#DOCUMENT

Amended  IN  Assembly  April 20, 2023
Amended  IN  Assembly  March 22, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 26

Introduced by Assembly Members Mike Fong and Santiago

December 05, 2022

An act to add and repeal Section 17132.12 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 26, as amended, Mike Fong. Personal Income Tax Law: exclusion: federal student loan debt relief plan.
The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, including an exclusion for the amount of student loan indebtedness repaid or canceled pursuant to a specified federal law.
This bill would exclude from an individual’s gross income, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, any amount of qualified student loan debt, as defined, that is discharged under the federal student loan debt relief plan, 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.
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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 17132.12 is added to the Revenue and Taxation Code, to read:

17132.12.
 (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, gross income does not include any amount of qualified student loan debt that is discharged under the federal student loan debt relief plan, as described in the Federal Register (87 Fed.Reg. 61512 (October 12, 2022)), as administered by the United States Department of Education pursuant to Section 1098bb of Title 20 of the United States Code.
(b) For purposes of this section, the following definitions apply:
(1) “Federal Pell Grant” means a grant made pursuant to Section 1070a of Title 20 of the United States Code.
(2) “Qualified student loan debt” means up to twenty thousand dollars ($20,000) for individuals who received a Federal Pell Grant, who meet the federal income requirements for debt cancellation, and whose eligible federal loans are discharged, as described in subdivision (a), and up to ten thousand dollars ($10,000) for individuals who have not received a Federal Pell Grant, who meet the federal income requirements for debt cancellation, and whose eligible federal loans are discharged, as described in subdivision (a).
(c) Nothing in this section is intended to limit This section shall not limit the application of the American Recovery Rescue Plan Act of 2021 (Public Law 117-2) relating to special rules for discharges in 2021 through 2025, to 2025, inclusive, or any act that would incorporate the amendments made by the American Recovery Rescue Plan Act of 2021 to Section 108(f)(5) of the Internal Revenue Code Code, relating to the special rules for discharges in 2021 through 2025. to 2025, inclusive.
(d) (1) For the purposes of complying with Section 41, the Legislature finds and declares that the goals, purposes, and objectives of the exclusion under this section, as added by this act, are both of the following:
(A) To recognize the financial hardship that Californians with federal student loan debts have endured as a result of the COVID-19 pandemic.
(B) To maximize the benefits of the federal student loan debt relief plan and provide some financial relief to an estimated 4,000,000 Californians who are eligible for the program.
(2) The performance indicators to measure whether the exclusion meets the goals, purposes, and objectives stated in paragraph (1) are as follows:
(A) The number of taxpayers excluding income pursuant to this section.
(B) The total dollar amount of income excluded pursuant to this section.
(3) By January 1, 2025, the Legislative Analyst’s Office shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, estimating the number of taxpayers excluding income pursuant to this section and the total dollar amount of income excluded.
(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

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.