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AB-35 Personal Income Tax Law: exclusion: student loan debt.(2023-2024)



Current Version: 02/01/23 - Amended Assembly

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AB35:v98#DOCUMENT

Amended  IN  Assembly  February 01, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 35

Introduced by Assembly Member Ting Committee on Budget (Assembly Members Ting (Chair), Alvarez, Arambula, Bennett, Bonta, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Garcia, Hart, Jackson, Jones-Sawyer, Lee, McCarty, Muratsuchi, Ramos, Reyes, Luz Rivas, Blanca Rubio, Wicks, and Wood)

December 05, 2022

An act to amend Section 17144.8 of the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 35, as amended, Committee on Budget. Personal Income Tax Law: exclusion: student loan debt.
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, 2021, and before January 1, 2026, the amount of certain student loans discharged, in whole or in part, after December 31, 2020, and before January 1, 2026, in conformity with federal law.
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.
This bill would state the intent of the Legislature to comply with those provisions.
This bill would make findings and declarations related to a gift of public funds.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 17144.8 of the Revenue and Taxation Code is amended to read:

17144.8.
 (a) Section 108(f)(5) of the Internal Revenue Code, Code relating to discharges on account of death or disability, as added by Section 11031(a) of the federal Tax Cuts and Jobs Act (Public Law 115-97), shall apply except as otherwise provided.
(b) Section 108(f)(5)(A) of the Internal Revenue Code, as added by Section 11031(a) of the federal Tax Cuts and Jobs Act (Public Law 115-97), is modified by substituting the phrase “after December 31, 2018,” in lieu of the phrase “after December 31, 2017, and before January 1, 2026.”
(c) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, the amendments made by Section 9675(a) of the American Rescue Plan Act of 2021 (Public Law 117-2) to Section 108(f)(5) of the Internal Revenue Code relating to the special rule for discharges in 2021 through 2025 shall apply.

SEC. 2.

 It is the intent of the Legislature to comply with Section 41.

SEC. 3.

 The Legislature hereby finds and declares that the exclusion authorized by Section 17144.8 of the Revenue and Taxation Code, as amended by this act, serves the public purpose of conforming with federal tax law for state tax purposes in order to lessen the tax burden on individuals who have their student loans discharged and does not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.