AB 232: Natural disasters: catastrophe savings accounts: personal income tax.

The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.

This bill, for taxable years beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, would allow a deduction from adjusted gross income for amounts contributed by an individual homeowner a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define catastrophe savings account to mean a regular savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense.

The Personal Income Tax Law, in conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.

This bill, for taxable years beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, would provide an exclusion from gross income for interest income earned by a catastrophe savings account. account until December 1, 2030.

Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.

This bill would include findings and reporting requirements in compliance with this requirement.

This bill would take effect immediately as a tax levy.