text:
(a) Gross income does not include any excludable restitution payments received by an eligible individual (or the individual’s heirs or estate) and any excludable interest.

(b) For purposes of this section:

(1) The basis of any property received by an eligible individual (or the individual’s heirs or estate) as part of an excludable restitution payment shall be the fair market value of that property as of the time of the receipt.

(2) “Eligible individual” means a person who was persecuted on the basis of race, religion, physical or mental disability, or sexual orientation by Nazi Germany, any other Axis regime, or any other Nazi-controlled or Nazi-allied country.

(3) “Excludable restitution payment” means any payment or distribution to an individual (or the individual’s heirs or estate) that is any of the following:

(A) Is payable by reason of the individual’s status as an eligible individual, including any amount payable by any foreign country, the United States of America, or any other foreign or domestic entity, or a fund established by any such country or entity, any amount payable as a result of a final resolution of a legal action, and any amount payable under a law providing for payments or restitution of property.

(B) Constitutes the direct or indirect return of, or compensation or reparation for, assets stolen or hidden from, or otherwise lost to, the individual before, during, or immediately after World War II by reason of the individual’s status as an eligible individual, including any proceeds of insurance under policies issued on eligible individuals by European insurance companies immediately before and during World War II.

(C) Consists of interest which is payable as part of any payment or distribution described in subparagraph (A) or (B).

(4) “Excludable interest” means any interest earned by any of the following:

(A) Escrow accounts or settlement funds established pursuant to the settlement of the action entitled “In re: Holocaust Victim Assets Litigation,” (E.D.N.Y.) C.A. No. 96-4849.

(B) Funds to benefit eligible individuals or their heirs created by the International Commission on Holocaust Insurance Claims as a result of the Agreement between the Government of the United States of America and the Government of the Federal Republic of Germany concerning the Foundation “Remembrance, Responsibility, and Future,” dated July 17, 2000.

(C) Similar funds subject to the administration of the United States courts created to provide excludable restitution payments to eligible individuals (or eligible individuals’ heirs or estates).

(c) (1) This section shall apply to any amount received on or after January 1, 2000.

(2) Nothing in this section shall be construed to create any inference with respect to the proper tax treatment of any amount received before January 1, 2000.

history: (History: Added by Stats. 2002, Ch. 701, Sec. 2. Effective January 1, 2003.)

article: 3. Items Specifically Excluded from Gross Income


kind: section

code: RTC

text:
(a) Gross income does not include any excludable settlement payments received by an eligible individual (or the individual’s heirs or estate) and any excludable interest.

(b) For purposes of this section:

(1) The basis of any property received by an eligible individual (or the individual’s heirs or estate) as part of an excludable settlement payment shall be the fair market value of that property as of the time of the receipt.

(2) “Eligible individual” means a person who was persecuted on the basis of race or religion by the regime that was in control of the Ottoman Turkish Empire from 1915 through 1923.

(3) “Excludable settlement payment” means any payment or distribution to an individual (or the individual’s heirs or estate) that is any of the following:

(A) Is payable by reason of the individual’s status as an eligible individual, including any amount payable by any foreign or domestic entity or a fund established by any entity, any amount payable as a result of a final resolution of a legal action, and any amount payable under a law providing for payments or restitution of property.

(B) Constitutes compensation to the individual from 1915 until 1923, by reason of the individual’s status as an eligible individual, including any proceeds of insurance under policies issued on eligible individuals immediately before 1915 and during the time period from 1915 until 1923.

(C) Consists of interest that is payable as part of any payment or distribution described in subparagraph (A) or (B).

(4) “Excludable interest” means any interest earned by any of the following:

(A) A fund to benefit eligible individuals or their heirs created by an international commission or an international organization.

(B) A fund subject to the administration of the United States courts created to provide excludable settlement payments to eligible individuals (or eligible individuals’ heirs or estates).

(c) (1) This section applies to any amount received on or after January 1, 2005.

(2) This section may not be construed to create any inference with respect to the proper tax treatment of any amount received before January 1, 2005.

history: (History: Added by Stats. 2004, Ch. 402, Sec. 2. Effective January 1, 2005.)

division: 2. OTHER TAXES

part: 10. PERSONAL INCOME TAX

chapter: 3. Computation of Taxable Income

path: 2. OTHER TAXES > 10. PERSONAL INCOME TAX > 3. Computation of Taxable Income > 3. Items Specifically Excluded from Gross Income


text: Any grant made in any taxable year by the Secretary of the Treasury under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (Public Law 111-5) to a person that places in service specified energy property shall not be includable in the gross income or the alternative minimum taxable income of the taxpayer, but shall be taken into account in determining the basis of the property to which that grant relates, except that the basis of that property shall be reduced using rules prescribed under Section 50(c) of the Internal Revenue Code in the same manner as a credit allowed under Section 48(a) of the Internal Revenue Code, and adjusted in accordance with rules applied by the Secretary of the Treasury under Section 1603(f) of the American Recovery and Reinvestment Tax Act of 2009 (Public Law 111-5).

history: (History: Added by Stats. 2010, Ch. 14, Sec. 11. (SB 401) Effective January 1, 2011.)


text:
(a) Section 106(d) of the Internal Revenue Code, relating to contributions to health savings accounts, shall not apply.

(b) Section 106(g) of the Internal Revenue Code, relating to qualified small employer health reimbursement arrangement, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 16. (SB 711) Effective October 1, 2025.)


text: Section 125(d)(2)(D) of the Internal Revenue Code, relating to the exception for health savings accounts, shall not apply.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 7.6. Effective October 7, 2005.)


text: Section 107 of the Internal Revenue Code is modified by substituting in paragraph (2) the phrase “the rental allowance paid to him or her as part of his or her compensation, to the extent used by him or her to rent or provide a home” in lieu of the phrase “the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities” contained therein.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 8. Effective October 7, 2005.)


text:
(a) For taxable years beginning on or after January 1, 2018, gross income shall not include earned income of an eligible taxpayer.

(b) For purposes of this section, the following definitions shall apply:

(1) “Earned income” has the same meaning as provided in Section 32(c)(2) of the Internal Revenue Code, relating to earned income, as modified to substitute the phrase “but only if such amounts would have been otherwise properly includable in gross income for the taxable year without regard to subdivision (a) and only to the extent that the earned income is derived from sources within Indian country in this state” for the phrase “but only if such amounts are includable in gross income for the taxable year.”

(2) “Eligible taxpayer” means an individual who is a member of a federally recognized Indian tribe in this state who resides within Indian country in this state.

(3) “Indian country” has the same meaning as provided in Section 30101.7.

history: (History: Added by Stats. 2018, Ch. 52, Sec. 4. (SB 855) Effective June 27, 2018.)


text:
(a) For taxable years beginning on or after January 1, 2019, gross income does not include any covered loan amount forgiven pursuant to Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), pursuant to the Paycheck Protection Program and Health Care Enhancement Act (Public Law 116-139), pursuant to the Paycheck Protection Program Flexibility Act of 2020 (Public Law 116-142), pursuant to the Consolidated Appropriations Act, 2021 (Public Law 116-260), or pursuant to the PPP Extension Act of 2021 (Public Law 117-6).

(b) For taxable years beginning on or after January 1, 2019, gross income does not include any advance grant amount issued pursuant to Section 1110(e) of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), or pursuant to Section 331 of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(c) (1) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Paragraph (1) of subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part.”

(3) The provisions of paragraph (1) of subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260), relating to paragraphs (2) and (3) of subsection (i) of Section 7A of the Small Business Act, shall not apply to an ineligible entity.

(4) Paragraph (2) of subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply.

(d) (1) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, subsection (b) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (b) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986, in the case of any taxable year ending after the date of the enactment of this Act” with “For purposes of this part.”

(3) Paragraphs (2) and (3) of subsection (b) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(e) (1) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, subsection (a) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (a) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part.”

(3) Paragraphs (2) and (3) of subsection (a) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(f) (1) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, subsection (b) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (b) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part.”

(g) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, Section 304(a) of Title III of Division N of the Consolidated Appropriations Act, 2021 (Public law 116-260) shall apply, except as provided.

(h) For purposes of this section, all of the following definitions shall apply:

(1) “Covered loan” has the same meaning as in Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), or pursuant to the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(2) “Advance grant amount” means an emergency Economic Injury Disaster Loan grant pursuant to Section 1110(e) of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), or a targeted Economic Injury Disaster Loan advance pursuant to Section 331 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(3) “Ineligible entity” means a taxpayer that either:

(A) Is a publicly traded company.

(B) Does not meet the reduction from the gross receipts requirements of Section 636(a)(37)(A)(iv)(bb) of Title 15 of the United States Code, as added by Section 311 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(4) “Publicly traded company” means a publicly traded entity as described in Section 342 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(i) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this section.

(j) The amendments made by the act adding this subdivision shall be operative for taxable years beginning on or after January 1, 2019.

(k) The amendments made to this section by Chapter 55 of the Statutes of 2022 shall be operative for taxable years beginning on or after January 1, 2019.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 17. (SB 711) Effective October 1, 2025. Operative in taxable years beginning on or after January 1, 2019, by Stats. 2022, Ch. 55.)


text: Gross income does not include any supplementary payment received by an individual pursuant to Section 12306.6 of the Welfare and Institutions Code.

history: (History: Added by Stats. 2010, Ch. 725, Sec. 8. (AB 1612) Effective October 19, 2010. Note: See Sec. 32 of Ch. 725.)


text: Notwithstanding any other law, for purposes of this part, the natural gas transmission line explosion on September 9, 2010, in San Bruno, California, shall be treated as a qualified disaster within the meaning of Section 139 of the Internal Revenue Code. This section shall apply to payments made on or after September 9, 2010.

history: (History: Added by Stats. 2011, Ch. 18, Sec. 1. (AB 50) Effective April 7, 2011.)


text: Section 4 of the Federal Disaster Tax Relief Act of 2023 (Public Law 118-148), relating to East Palestine disaster relief payments, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 18. (SB 711) Effective October 1, 2025.)


text:
(a) Gross income does not include any payments received by an individual from a guaranteed income pilot program or project that receives a grant pursuant to Section 18997 of the Welfare and Institutions Code.

(b) This section shall become inoperative on July 1, 2026, and, as of January 1, 2027, is repealed.

history: (History: Added by Stats. 2022, Ch. 50, Sec. 12. (SB 187) Effective June 30, 2022. Inoperative July 1, 2026, by its own provisions. Repealed as of January 1, 2027, by its own provisions.)


text: Gross income does not include any payment received by an individual pursuant to Section 8257 of the Welfare and Institutions Code.

history: (History: Added by Stats. 2023, Ch. 40, Sec. 21. (AB 129) Effective July 10, 2023.)


text: Gross income does not include any payment received from the California Victim Compensation Board pursuant to Sections 13955 and 13970 of the Government Code.

history: (History: Added by Stats. 2024, Ch. 119, Sec. 1. (AB 2979) Effective July 15, 2024.)


text:
(a) Gross income does not include any payments received by an individual pursuant to Section 8161 of the Welfare and Institutions Code.

(b) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.

history: (History: Added by renumbering Section 17131.12 (as added by Stats. 2022, Ch. 51, Sec. 2) by Stats. 2023, Ch. 131, Sec. 209. (AB 1754) Effective January 1, 2024. Repealed as of January 1, 2027, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, gross income does not include a bill credit or credits received by a customer from a community water system or wastewater treatment provider pursuant to the Water and Wastewater System Payments Under the American Rescue Plan Act of 2021 (Chapter 4.7 (commencing with Section 116773) of Part 12 of Division 104 of the Health and Safety Code).

(b) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 9. (SB 113) Effective February 9, 2022. Repealed as of December 1, 2026, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, gross income does not include a bill credit or credits received by a customer from a utility applicant under the California Arrearage Payment Program (CAPP), pursuant to the California Arrearage Payment Program Under the American Rescue Plan Act of 2021 (Article 12 (commencing with Section 16429.5) of Chapter 2 of Part 2 of Division 4 of Title 2 of the Government Code).

(b) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 10. (SB 113) Effective February 9, 2022. Repealed as of December 1, 2026, by its own provisions.)


text: Gross income does not include any payment received by an individual pursuant to Section 15990 of the Government Code.

history: (History: Added by Stats. 2024, Ch. 266, Sec. 5. (AB 1878) Effective January 1, 2025.)


text:
(a) For taxable years beginning on or after January 1, 2022, and before January 1, 2027, gross income does not include a bill credit or credits received by a customer from a utility applicant under the 2022 California Arrearage Payment Program, pursuant to Article 13 (commencing with Section 16429.8) of Chapter 2 of Part 2 of Division 4 of Title 2 of the Government Code.

(b) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 61, Sec. 12. (AB 205) Effective June 30, 2022. Repealed as of December 1, 2027, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2022, and before January 1, 2027, gross income does not include any amount relating to the discharge of any unpaid fees due or owed by a student to a community college which was discharged pursuant to subparagraph (G) of paragraph (3) of subdivision (a) of Section 32527 of the Education Code.

(b) (1) For the purposes of complying with Section 41, the Legislature finds and declares that the purpose of the exclusion allowed by this section is to provide financial relief to community college students affected by the adverse impacts of the economic disruptions and hardships resulting from the COVID-19 emergency.

(2) The performance indicators used to determine whether the exclusion is achieving its stated purpose are the number of students that had fees discharged pursuant to subparagraph (G) of paragraph (3) of subdivision (a) of Section 32527 of the Education Code, and the total dollar value of those fees discharged.

(3) The report required to be submitted by the Chancellor’s Office of the California Community Colleges to the Legislature, as required by paragraph (5) of subdivision (a) of Section 32527 of the Education Code, shall constitute reporting for the purpose of complying with Section 41.

(c) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

history: (History: Added by Stats. 2023, Ch. 5, Sec. 1. (AB 111) Effective May 15, 2023. Repealed as of December 1, 2027, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2020, and before January 1, 2028, gross income does not include amounts of certain emergency financial aid grants received by a student in postsecondary education pursuant to, or described in, any of the following:

(1) Section 3504 or 18004 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Public Law 116-136).

(2) Section 314 of Division M or Section 277 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(3) Section 2003 of the American Rescue Plan Act of 2021 (Public Law 117-2).

(b) (1) For purposes of complying with Section 41, as it pertains to this section, the Legislature finds and declares as follows:

(A) The specific goal, purpose, and objective of the exclusion is to provide financial relief to recipients of specified pandemic relief funds.

(B) The performance indicators for the Legislature to use in determining if the exclusion has achieved this goal shall be the number of taxpayers excluding specified pandemic relief from income based on this section, and the total dollar value of income so excluded.

(2) The Legislative Analyst’s Office shall, no later than November 1, 2028, submit a report to the Legislature, in accordance with Section 9795 of the Government Code, that estimates the number of taxpayers with specified pandemic relief excluded from income, and estimates the total dollar value of the specified pandemic relief received, to the extent data is available.

(c) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2023, Ch. 5, Sec. 2. (AB 111) Effective May 15, 2023. Repealed as of December 1, 2028, by its own provisions.)


text: Section 114 of the Internal Revenue Code, relating to extraterritorial income, shall not apply.

history: (History: Added by Stats. 2002, Ch. 34, Sec. 8. Effective May 8, 2002. See identical section added by Stats. 2002, Ch. 35.)


text: For taxable years beginning on or after January 1, 2021, a nonresident alien’s gross income does not include any payment made by an agent pursuant to subdivision (c) of Section 18537.

history: (History: Amended by Stats. 2025, Ch. 73, Sec. 1. (AB 1518) Effective January 1, 2026.)


text:
(a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any payment made pursuant to Section 6417 of the Internal Revenue Code, as added by Public Law 117-169, relating to elective payment of applicable credits. Sections 6417(c)(1)(C) and 6417(c)(1)(D) of the Internal Revenue Code, as added by Public Law 117-169, shall apply.

(b) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any payment made pursuant to Section 6418 of the Internal Revenue Code, as added by Public Law 117-169, relating to transfer of certain credits.

(1) Sections 6418(c)(1)(A) and 6418(c)(1)(B) of the Internal Revenue Code, as added by Public Law 117-169, shall apply.

(2) No deduction shall be allowed for any amount paid in consideration of a transfer made as described in Section 6418 of the Internal Revenue Code, as added by Public Law 117-169.

(c) For purposes of this section, “payment made pursuant to Section 6418 of the Internal Revenue Code” includes the value of a credit received by a transferee pursuant to Section 6418 of the Internal Revenue Code, as added by Public Law 117-169.

(d) (1) For purposes of complying with Section 41, for this section and Section 24310.5, the Legislature finds and declares all of the following:

(A) The goal, purpose, and objective of the conformity to the exclusion and deduction provisions of Sections 6417 and 6418 of the Internal Revenue Code is to promote the investment and construction of clean energy projects and clean energy advanced manufacturing facilities in California.

(B) The performance indicators to measure whether the conformity meets the goal, purpose, and objective stated in subparagraph (A) are data from taxpayers utilizing credits under Sections 6417 and 6418 of the Internal Revenue Code filing in California.

(2) To assist the Legislature in determining whether the conformity fulfills the goal, purpose, and objective stated in subparagraph (A) of paragraph (1), the Franchise Tax Board shall report to the Legislature regarding the data described in subparagraph (B) of paragraph (1) on or before November 1, 2029, in compliance with Section 9795 of the Government Code.

(e) This section shall remain in effect only until December 1, 2031, and as of that date is repealed.

history: (History: Added by Stats. 2025, Ch. 215, Sec. 2. (SB 302) Effective October 1, 2025. Repealed as of December 1, 2031, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2005, gross income does not include the death benefits received by an eligible individual.

(b) For purposes of this section:

(1) “Death benefit” means the entire amount of the death benefit payment made pursuant to Chapter 3.5 (commencing with Section 850) of Division 4 of the Military and Veterans Code.

(2) “Eligible individual” means the surviving spouse of, or a beneficiary designated by, any member of the California National Guard, State Guard, or Naval Militia who dies or is killed in the performance of duty, as provided in Section 850 of the Military and Veterans Code.

history: (History: Amended by Stats. 2020, Ch. 97, Sec. 46. (AB 2193) Effective January 1, 2021.)


text:
Section 101 of the Internal Revenue Code, relating to certain death benefits, is modified as follows:

(a) Section 101(h) of the Internal Revenue Code, relating to survivor benefits attributable to service by a public safety officer who is killed in the line of duty, is modified to apply to amounts received in taxable years beginning after December 31, 1996, with respect to individuals dying after December 31, 1996.

(b) (1) Section 101 of the Internal Revenue Code, as modified by subdivision (a) is modified to additionally provide that Section 101(h) of the Internal Revenue Code shall not apply to survivor benefits attributable to service by a public safety officer who is killed in the line of duty with respect to deaths occurring before December 31, 1996, that would otherwise be eligible for exclusion pursuant to Section 101(h) of the Internal Revenue Code, as modified by Public Law 107-15.

(2) The amendments made to this section by Chapter 691 of the Statutes of 2005 shall apply to amounts paid after December 31, 2001, with respect to deaths occurring on or before December 31, 1996.

(c) (1) Section 101 of the Internal Revenue Code, as modified by subdivision (b), is modified to additionally provide that Section 101(i) of the Internal Revenue Code shall apply to any astronaut whose death occurs in the line of duty.

(2) The amendments made to this section by Chapter 552 of the Statutes of 2004 shall apply to amounts received in taxable years beginning after December 31, 2002, with respect to deaths occurring after that date.

(d) Section 101(j) of the Internal Revenue Code, relating to the treatment of certain employer-owned life insurance contracts, shall apply in accordance with the provisions of Section 863 of the Pension Protection Act of 2006 (Public Law 109-280), relating to effective dates, except that the phrase “January 1, 2010,” shall be substituted for “the date of the enactment of this Act” contained therein.

history: (History: Amended by Stats. 2010, Ch. 14, Sec. 12. (SB 401) Effective January 1, 2011.)


text: A payment under Section 103(c)(10) of the Ricky Ray Hemophilia Relief Fund Act of 1998 (Public Law 105-369) to an individual shall be treated for purposes of this part, Part 10.2 (commencing with Section 18401) and Part 11 (commencing with Section 23001) as damages described in Section 104(a)(2) of the Internal Revenue Code.

history: (History: Added by renumbering Section 17132.6 (as added by Stats. 2002, Ch. 35) by Stats. 2002, Ch. 807, Sec. 4. Effective September 23, 2002.)


text:
(a) For purposes of this part, Part 10.2 (commencing with Section 18401), and Part 11 (commencing with Section 23001), gross income shall not include any amount received from the Virginia Polytechnic Institute and State University, out of amounts transferred from the Hokie Spirit Memorial Fund established by the Virginia Tech Foundation, an organization organized and operated as described in Section 501(c)(3) of the Internal Revenue Code, if that amount is paid on account of the events on April 16, 2007, at that university.

(b) This section shall apply without regard to taxable year.

history: (History: Added by Stats. 2010, Ch. 14, Sec. 13. (SB 401) Effective January 1, 2011.)


text:
(a) For taxable years beginning on or after January 1, 2025, and before January 1, 2030, gross income shall not include retirement pay received by a qualified taxpayer during the taxable year, not to exceed twenty thousand dollars ($20,000), from the federal government for service in the uniformed services.

(b) For purposes of this section, the following definitions apply:

(1) “Qualified taxpayer” means a taxpayer that satisfies either of the following:

(A) In the case of a surviving spouse or spouses filing a joint return, adjusted gross income, as required to be shown on the federal tax return for the same taxable year, does not exceed two hundred fifty thousand dollars ($250,000).

(B) In the case of any other individual, adjusted gross income, as required to be shown on the federal tax return for the same taxable year, does not exceed one hundred twenty-five thousand dollars ($125,000).

(2) “Uniformed services” means the Armed Forces of the United States, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the United States Public Health Service, and the National Oceanic and Atmospheric Administration Commissioned Officer Corps.

(c) This section shall remain in effect only until December 1, 2030, and as of that date is repealed.

history: (History: Added by Stats. 2025, Ch. 17, Sec. 12. (SB 132) Effective June 27, 2025. Repealed as of December 1, 2030, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2025, and before January 1, 2030, gross income shall not include annuity payments received by a qualified taxpayer during the taxable year, not to exceed twenty thousand dollars ($20,000), pursuant to a United States Department of Defense Survivor Benefit Plan.

(b) For purposes of this section, the following definitions apply:

(1) “Qualified taxpayer” means the surviving spouse or other named beneficiary of a plan who satisfies either of the following:

(A) In the case of a surviving spouse or spouses filing a joint return, adjusted gross income, as required to be shown on the federal tax return for the same taxable year, does not exceed two hundred fifty thousand dollars ($250,000).

(B) In the case of any other individual, adjusted gross income, as required to be shown on the federal tax return for the same taxable year, does not exceed one hundred twenty-five thousand dollars ($125,000).

(2) “United States Department of Defense Survivor Benefit Plan” or “plan” means a survivor benefit plan established pursuant to Sections 1447 to 1455, inclusive, of Title 10 of the United States Code.

(c) This section shall remain in effect only until December 1, 2030, and as of that date is repealed.

history: (History: Added by Stats. 2025, Ch. 17, Sec. 13. (SB 132) Effective June 27, 2025. Repealed as of December 1, 2030, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2014, gross income shall not include any loan amount repaid by the United States Secretary of Education or canceled pursuant to Section 1098e of Title 20 of the United States Code relating to income-based repayment.

(b) For taxable years beginning on or after January 1, 2017, and before January 1, 2022, gross income shall not include any loan amount repaid by the United States Secretary of Education or canceled pursuant to Section 1087e(e) of Title 20 of the United States Code relating to income-contingent repayment.

history: (History: Amended by Stats. 2018, Ch. 92, Sec. 193. (SB 1289) Effective January 1, 2019.)


text: Income which this state is prohibited from taxing includes interest on bonds issued by this state or a local government in this state, and the determination of whether a bond is issued by this state or a local government in this state shall be made without regard to (a) the source of payment of that bond or the security for that bond, public or private, and (b) whether or not public improvements are financed. If there is at any time following the original issuance of such a bond a separation in ownership between the bond and any right to receive interest on the bond (whether or not evidenced by a coupon), payments or accruals on that stripped bond and stripped coupon shall be treated in a manner consistent with Section 1286(d) of the Internal Revenue Code.

history: (History: Amended by Stats. 1989, Ch. 1352, Sec. 26. Effective October 2, 1989. Applicable to taxable years beginning on or after January 1, 1989, by Sec. 172 of Ch. 1352.)


text:
The following phrase (or its substantial equivalent) in other codes or statutes does not exempt the gain or loss from the sale or transfer of bonds from the provisions of this part:

“The issuance, transfer and interest income earned on any bonds issued by an agency (state or local) under this article (chapter, section, etc.) is exempt from taxation of every kind by any state or local entity.”

history: (History: Added by Stats. 1986, Ch. 317, Sec. 1. Effective July 15, 1986.)


text: Any loan made pursuant to the Forgivable Loan Program of the California State University shall be deemed to be a student loan within the meaning of Section 108(f)(2) of the Internal Revenue Code, and Section 108(f)(1) shall apply to any discharge of the loan that is made in connection with the borrower’s performance of services for the California State University.

history: (History: Added by Stats. 1997, Ch. 228, Sec. 1. Effective August 5, 1997.)


text: The use of an automobile by a special agent of federal or state taxing agencies shall be treated in the manner provided for by Section 1567 of Public Law 99-514.

history: (History: Added by Stats. 1987, Ch. 1138, Sec. 56. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)


text:
(a) Gross income does not include cost-share payments received by forest landowners from the Department of Forestry and Fire Protection pursuant to the California Forest Improvement Act of 1978 (Part 2.5 (commencing with Section 4790) of Division 1 of the Public Resources Code) or from the United States Department of Agriculture, Forest Service, under the Forest Stewardship Program and the Stewardship Incentives Program, pursuant to the Cooperative Forestry Assistance Act, as amended (Public Law 101-624).

(b) The amount of any cost-share payment excluded pursuant to subdivision (a) shall not be considered with regard to either of the following:

(1) Determining the basis of property acquired or improved.

(2) Computing any allowable deduction to which the taxpayer may otherwise be entitled.

history: (History: Added by Stats. 1994, Ch. 22, Sec. 1. Effective March 25, 1994.)


text:
Section 1078 of Public Law 98-369 (Tax Reform Act of 1984), relating to exclusions from gross income of payments from the United States Forest Service as a result of restricting motorized traffic in the Boundary Waters Canoe Area, shall apply, with the following exceptions:

(a) Section 1078(f)(2) of that act shall not be applicable.

(b) This section shall be effective only for payments made in taxable years beginning on or after January 1, 1985.

history: (History: Added by Stats. 1985, Ch. 1461, Sec. 14. Effective October 1, 1985.)


text:
Any amount received as a rebate or voucher from a local water or energy agency or supplier for any expenses the taxpayer paid or incurred for the purchase or installation of any of the following devices shall be treated as a refund or price adjustment of amounts payable to that water or energy agency or supplier:

(a) A water conservation water closet that meets the performance standards of American National Standards Institute Standard A112.19.2 and uses no more than 1.6 gallons per flush, or for the installation of a urinal that meets the performance standards of American National Standards Institute Standard A112.19.2 and uses no more than one gallon per flush.

(b) A water and energy efficient clothes washer that meets a 1.04 modified energy factor and 9.5 water use efficiency factor as determined by the State Energy Resources and Conservation Commission.

(c) A plumbing device necessary to serve the recycled water uses described in Sections 13553 and 13554 of the Water Code.

history: (History: Amended by Stats. 2001, Ch. 212, Sec. 1. Effective August 31, 2001.)


text:
Gross income does not include any amount received as a rebate, voucher, or other financial incentive issued by the California Energy Commission, the Public Utility Commission, or a local publicly owned electric utility, as defined in subdivision (d) of Section 9604 of the Public Utilities Code, for any expenses paid or incurred by a taxpayer for the purchase or installation of any of the following devices:

(a) A thermal system as defined in Section 25600 of the Public Resources Code.

(b) A solar system as defined in Section 25600 of the Public Resources Code.

(c) A wind energy system device that produces electricity.

(d) A fuel cell generating system, as described in the California Energy Commission’s Emerging Renewable Resources Account Guidebook, that produces electricity.

history: (History: Added by Stats. 2002, Ch. 843, Sec. 1. Effective September 24, 2002.)


text:
(a) For taxable years beginning on or after January 1, 2022, and before January 1, 2027, gross income does not include any amount received as a rebate, voucher, or other financial incentive issued by a public water system, local government, or state agency for participation in a turf replacement water conservation program.

(b) For the purposes of this section, “public water system” shall have the same meaning as in Section 116275 of the Health and Safety Code.

(c) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 674, Sec. 1. (AB 2142) Effective September 28, 2022. Repealed as of December 1, 2027, by its own provisions.)


text:
(a) For each taxable year beginning on or after July 1, 2015, gross income does not include an amount received as a loan forgiveness, grant, credit, rebate, voucher, or other financial incentive issued by the California Residential Mitigation Program or the California Earthquake Authority to assist a residential property owner or occupant with expenses paid, or obligations incurred, for earthquake loss mitigation.

(b) For the purposes of this section, “earthquake loss mitigation” means an activity that reduces seismic risks to a residential structure or its contents, or both. For purposes of structural seismic risk mitigation, a residential structure is either of the following:

(1) A structure described in subdivision (a) of Section 10087 of the Insurance Code.

(2) A residential building of not fewer than 2, but not more than 10, dwelling units.

history: (History: Amended by Stats. 2015, Ch. 323, Sec. 10. (SB 102) Effective September 22, 2015.)


text:
(a) Gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) The term “qualified amount” includes any of the following:

(A) Amounts received by a qualified taxpayer during the remediation of the Carousel Housing Tract, located in Carson, California, from the Shell Oil Company for costs associated with temporary accommodations and relocation pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046. These costs include all amounts paid under the Temporary Living Assistance section of the Revised Remedial Action Plan, Relocation Plan, developed by URS Corporation for Shell Oil Products U.S., dated September 19, 2014.

(B) Amounts received by a qualified taxpayer paid under the Optional Real Estate Program of the Revised Remedial Action Plan, Relocation Plan, developed by URS Corporation for Shell Oil Products U.S., dated September 19, 2014.

(C) Any amounts received by a qualified taxpayer from a settlement arising out of the investigation, cleanup, or abatement of the waste discharged at the former Kast Property Tank Farm facility pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046.

(2) The term “qualified amount” does not include any reimbursed amounts representing any expenses related to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046 that were deducted under this part.

(c) For purposes of this section, “qualified taxpayer” means either of the following:

(1) Any taxpayer that currently owns or previously owned real property located within the Carousel Housing Tract, located in Carson, California, who received amounts, incurred expenses, or received amounts from a settlement arising out of or pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046.

(2) Any taxpayer that currently resides or previously resided within the Carousel Housing Tract, located in Carson, California, who received amounts, incurred expenses, or received amounts from a settlement arising out of or pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046.

(d) The payor under the Revised Remedial Action Plan, Relocation Plan, developed by URS Corporation for Shell Oil Products U.S., dated September 19, 2014, and the payor or payors of the settlement proceeds arising out of or pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046, shall provide, upon request by the Franchise Tax Board, an annual list of names, addresses, payment dates, and amounts paid to qualified taxpayers.

(e) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of such date by the operation of any law or rule of law, including res judicata, such credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

history: (History: Added by Stats. 2018, Ch. 887, Sec. 2. (SB 343) Effective September 28, 2018.)


text:
(a) Gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from the Fire Victims Trust, established pursuant to the order of the United States Bankruptcy Court for the Northern District of California dated June 20, 2020, case number 19-30088, docket number 8053.

(2) “Qualified taxpayer” means any of the following:

(A) (i) Any taxpayer that owned real property located in the County of Amador or Calaveras during the 2015 Butte Fire who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to the 2015 Butte Fire.

(ii) Any taxpayer that resided within the County of Amador or Calaveras during the 2015 Butte Fire who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to the 2015 Butte Fire.

(B) (i) Any taxpayer that owned real property located in the County of Napa, Sonoma, Lake, Butte, Mendocino, or Solano during the 2017 North Bay Fires who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to one or more of the 2017 North Bay Fires.

(ii) Any taxpayer that resided within the County of Napa, Sonoma, Lake, Butte, Mendocino, or Solano during the 2017 North Bay Fires who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to one or more of the 2017 North Bay Fires.

(C) (i) Any taxpayer that owned real property located in the County of Butte during the 2018 Camp Fire who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to the 2018 Camp Fire.

(ii) Any taxpayer that resided within the County of Butte during the 2018 Camp Fire who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to the 2018 Camp Fire.

(c) The Fire Victims Trust, shall provide, upon request by the Franchise Tax Board, an annual list of names, addresses, payment dates, and qualified amounts paid to qualified taxpayers.

(d) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of that date by the operation of any law or rule of law, including res judicata, that credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

(e) This section shall remain in effect only until January 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 749, Sec. 2. (AB 1249) Effective September 29, 2022. Repealed as of January 1, 2028, by its own provisions.)


text:
(a) For taxable years beginning before January 1, 2027, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from Southern California Edison in settlement for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer that owned real property located in the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(B) Any taxpayer that resided within the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(C) Any taxpayer that had a place of business within the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(D) Any taxpayer that owned real property located in the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(E) Any taxpayer that resided within the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(F) Any taxpayer that had a place of business within the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(3) “Settlement entity” means the entity making the settlement payment to a qualified taxpayer as described in paragraph (2).

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of that date by the operation of any law or rule of law, including res judicata, that credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

(e) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 841, Sec. 2. (SB 1246) Effective September 29, 2022. Repealed as of December 1, 2027, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2030, gross income shall not include any qualified amount received by a qualified taxpayer in the taxable year.

(b) For purposes of this section, the following definitions shall apply:

(1) “Qualified amount” means any amount received from a settlement entity by a qualified taxpayer in connection with a qualified wildfire disaster in California.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer who owns real property located in an area damaged by a qualified wildfire disaster who paid or incurred expenses, and received qualified amounts from a settlement entity, arising out of or pursuant to the qualified wildfire disaster.

(B) Any taxpayer who resides within an area damaged by a qualified wildfire disaster who paid or incurred expenses, and received qualified amounts from a settlement entity, arising out of or pursuant to the qualified wildfire disaster.

(C) Any taxpayer who has a place of business within an area damaged by a qualified wildfire disaster who paid or incurred expenses, and received qualified amounts from a settlement entity, arising out of or pursuant to the qualified wildfire disaster.

(3) “Qualified wildfire disaster” means any disaster arising from a wildfire for which either the Governor has declared a state of emergency or the President of the United States has declared an emergency or major disaster as defined under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. Sec. 5121 et seq.).

(4) “Settlement entity” means an entity making a settlement payment of a qualified amount to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board or qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board or the qualified taxpayer.

(d) The qualified taxpayer shall provide, upon request, all necessary information in the form and manner prescribed by the Franchise Tax Board.

(e) This section shall remain in effect only until December 1, 2030, and as of that date is repealed.

history: (History: Amended by Stats. 2025, Ch. 112, Sec. 1. (SB 159) Effective September 17, 2025. Repealed as of December 1, 2030, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income shall not include any amount received by a qualified taxpayer as a California qualified wildfire loss mitigation payment.

(b) For purposes of this section, the following definitions apply:

(1) “California qualified wildfire loss mitigation payment” means any amount which is received through the California Wildfire Mitigation Financial Assistance Program under Article 16.5 (commencing with Section 8654.2) of Chapter 7 of Division 1 of Title 2 of the Government Code for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation.

(2) “Qualified taxpayer” means a taxpayer that owns the structure for which a California qualified wildfire loss mitigation payment was received.

(3) “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both.

(c) (1) For the purpose of complying with Section 41, as it relates to the tax exclusion provided by this section and Section 24308.10, the Legislature finds and declares the following:

(A) The specific goal, purpose, and objective of the tax exclusion is to provide relief to qualifying property owners in high fire areas who participate in the California Wildfire Mitigation Financial Assistance Program pursuant to Section 8654.2 of the Government Code.

(B) The performance indicators for the Legislature to use in determining if the exclusion achieves the stated goal, purpose, and objective shall be the number of qualified taxpayers that may be eligible to exclude qualified amounts from gross income, and the aggregate amount of funds distributed from the California Wildfire Mitigation Financial Assistance Program.

(2) (A) No later than December 1, 2029, the joint powers authority created pursuant to Section 8654.4 of the Government Code shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the aggregate amount of funds distributed from the California Wildfire Mitigation Financial Assistance Program, and the number of individuals who accepted funds from the program who may be eligible to exclude the income pursuant to this section and Section 24308.10.

(B) Notwithstanding Section 19542, the Franchise Tax Board may provide data related to amounts excluded from gross income pursuant to this section and Section 24308.10, requested by the joint powers authority, to the extent that data is available. Taxpayer information received by the joint powers authority pursuant to this section is subject to Section 19542.

(d) This section shall remain in effect only until December 1, 2029, and as of that date is repealed.

history: (History: Added by Stats. 2024, Ch. 987, Sec. 1. (SB 946) Effective September 29, 2024. Repealed as of December 1, 2029, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2020, and before January 1, 2028, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from a settlement entity in connection with the 2019 Kincade Fire.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer that owned real property located in the County of Sonoma during the 2019 Kincade Fire who paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2019 Kincade Fire.

(B) Any taxpayer that resided within the County of Sonoma during the 2019 Kincade Fire who paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2019 Kincade Fire.

(C) Any taxpayer that had a place of business within the County of Sonoma during the 2019 Kincade Fire who paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the Kincade Fire.

(3) “Settlement entity” means Pacific Gas and Electric Company or its subsidiary that is making the settlement payment to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) For the purpose of complying with Section 41 in regards to the exclusion provided by this section and Section 24309.6, the Legislature finds and declares that the specific goal, purpose, and objective of the tax exclusion is to provide essential relief to individuals who have suffered injury, loss, inconvenience, and expenses resulting from the devastating 2019 Kincade Fire.

(2) (A) On December 1, 2028, the Legislative Analyst’s Office shall deliver to the Legislature a written report that includes both of the following:

(i) To the extent feasible, the estimated number of qualified taxpayers that excluded qualified amounts from gross income, as those terms are used in this section and Section 24309.6, as a result of the exclusion.

(ii) The estimated aggregate amount of those settlement payments arising out of the 2019 Kincade Fire.

(B) The report required by this paragraph shall be delivered to the Legislature in compliance with Section 9795 of the Government Code.

(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2023, Ch. 55, Sec. 5. (SB 131) Effective July 10, 2023. Repealed as of December 1, 2028, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2020, and before January 1, 2028, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from a settlement entity in connection with the 2020 Zogg Fire.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer that owned real property located in the County of Shasta or the County of Tehama during the 2020 Zogg Fire who paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2020 Zogg Fire.

(B) Any taxpayer that resided within the County of Shasta or the County of Tehama during the 2020 Zogg Fire who paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2020 Zogg Fire.

(C) Any taxpayer that had a place of business within the County of Shasta or the County of Tehama during the 2020 Zogg Fire who paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2020 Zogg Fire.

(3) “Settlement entity” means Pacific Gas and Electric Company or its subsidiary that is making the settlement payment to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) For the purpose of complying with Section 41 in regards to the exclusion provided by this section and Section 24309.7, the Legislature finds and declares that the specific goal, purpose, and objective of the tax exclusion is to provide essential relief to individuals who have suffered injury, loss, inconvenience, and expenses resulting from the devastating 2020 Zogg Fire.

(2) (A) On December 1, 2028, the Legislative Analyst’s Office shall deliver to the Legislature a written report that includes both of the following:

(i) To the extent feasible, the estimated number of qualified taxpayers that excluded qualified amounts from gross income, as those terms are used in this section and Section 24309.7, as a result of the exclusion.

(ii) The estimated aggregate amount of those settlement payments arising out of the 2020 Zogg Fire.

(B) The report required by this paragraph shall be delivered to the Legislature in compliance with Section 9795 of the Government Code.

(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2023, Ch. 55, Sec. 6. (SB 131) Effective July 10, 2023. Repealed as of December 1, 2028, by its own provisions.)


text: For taxpayers who were not allowed to deduct the vehicle smog impact fee imposed by Section 6262 when paid or incurred, any interest paid by this state in conjunction with the refund of the smog impact fee shall be excluded from gross income.

history: (History: Added by Stats. 2000, Ch. 31, Sec. 2. Effective June 8, 2000.)


text: Section 139A of the Internal Revenue Code, relating to federal subsidies for prescription drug plans, shall not apply.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 12. Effective October 7, 2005.)


text:
(a) For purposes of this section, the following terms have the following meanings as provided in the Golden State Scholarshare Trust Act (Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code):

(1) “Beneficiary” has the meaning set forth in subdivision (c) of Section 69980 of the Education Code.

(2) “Benefit” has the meaning set forth in subdivision (d) of Section 69980 of the Education Code.

(3) “Participant” has the meaning set forth in subdivision (h) of Section 69980 of the Education Code.

(4) “Participation agreement” has the meaning set forth in subdivision (i) of Section 69980 of the Education Code.

(5) “Scholarshare trust” has the meaning set forth in subdivision (f) of Section 69980 of the Education Code.

(b) For taxable years beginning on or after January 1, 1998, and before January 1, 2002, except as otherwise provided in subdivision (c), gross income of a beneficiary or a participant does not include any of the following:

(1) Any distribution or earnings under a Scholarshare trust participation agreement, as provided in Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code.

(2) Any contribution to the Scholarshare trust on behalf of a beneficiary shall not be includable as gross income of that beneficiary.

(c) For taxable years beginning on or after January 1, 1998, and before January 1, 2002:

(1) Any distribution under a Scholarshare trust participation agreement shall be includable in the gross income of the distributee in the manner as provided under Section 72 of the Internal Revenue Code, as modified by Section 17085, to the extent not excluded from gross income under this part. For purposes of applying Section 72 of the Internal Revenue Code, the following apply:

(A) All Scholarshare trust accounts of which an individual is a beneficiary shall be treated as one account, except as otherwise provided.

(B) All distributions during a taxable year shall be treated as one distribution.

(C) The value of the participation agreement, income on the participation agreement, and investment in the participation agreement shall be computed as of the close of the calendar year in which the taxable year begins.

(2) A contribution by a for-profit or nonprofit entity, or by a state or local government agency, for the benefit of an owner or employee of that entity or a beneficiary whom the owner or employee has the power to designate, including the owner or employee’s minor children, shall be included in the gross income of that owner or employee in the year the contribution is made.

(3) For purposes of this subdivision, “distribution” includes any benefit furnished to a beneficiary under a participation agreement, as provided in Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code.

(4) (A) Paragraph (1) shall not apply to that portion of any distribution that, within 60 days of distribution, is transferred to the credit of another beneficiary under the Scholarshare trust who is a “member of the family,” as that term is used in Section 529(e)(2) of the Internal Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of 1997 (Public Law 105-34), of the former beneficiary of that Scholarshare trust.

(B) Any change in the beneficiary of an interest in the Scholarshare trust shall not be treated as a distribution for purposes of paragraph (1) if the new beneficiary is a “member of the family,” as that term is used in Section 529(e)(2) of the Internal Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of 1997 (Public Law 105-34), of the former beneficiary of that Scholarshare trust.

(d) For taxable years beginning on or after January 1, 2002, Sections 529(c) and 529(e) of the Internal Revenue Code, relating to tax treatment of designated beneficiaries and contributors and to other definitions and special rules, respectively, shall apply, except as otherwise provided in Part 11 (commencing with Section 23001) and this part.

(e) (1) The amendments made by Section 302(a)(1) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529(e) of the Internal Revenue Code, relating to other definitions and special rules, shall apply except as otherwise provided.

(2) The amendments made by Section 302(b)(1) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529(c)(3) of the Internal Revenue Code, relating to distributions, shall apply, except as otherwise provided.

(3) The amendments made by Section 302(c)(1) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529(c)(3)(D) of the Internal Revenue Code, relating to special rule for contributions of refunded amounts, shall apply, except as otherwise provided.

(f) (1) The amendments made by Section 11025(a) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 529(c)(3)(C) of the Internal Revenue Code, relating to change in beneficiaries or programs, shall apply, except as otherwise provided.

(2) (A) The amendments made by Section 11032(a)(1) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 529(c) of the Internal Revenue Code, relating to tax treatment of designated beneficiaries and contributors, shall not apply, except as otherwise provided.

(B) The amendments made by Section 11032(a)(2) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 529(e)(3)(A) of the Internal Revenue Code, relating to qualified higher education expenses, shall not apply, except as otherwise provided.

(C) In the case of any distribution made under Section 529(e)(3)(A) of the Internal Revenue Code, as amended by Section 11032(a)(2) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), that would be treated for federal income tax purposes as a “qualified higher education expense” under Section 529(c)(7) of the Internal Revenue Code, as added by Section 11032(a)(1) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), the amount of that distribution shall, notwithstanding anything in Section 529 of the Internal Revenue Code to the contrary, be includable in the gross income of the distributee in the manner as provided under Section 72 of the Internal Revenue Code.

(D) Any distribution includable in the gross income of a distributee under subparagraph (C) shall not affect the exempt status of the qualified tuition program under Section 529 of the Internal Revenue Code for purposes of this part.

(g) (1) For taxable years beginning on or after January 1, 2021, the amendments made by Section 302(a) of Division O of the Further Consolidated Appropriations Act, 2020 (Public Law 116-94) to Section 529(c)(8) of the Internal Revenue Code, relating to distributions for certain expenses associated with registered apprenticeship programs, shall apply.

(2) For taxable years beginning on or after January 1, 2021, the amendments made by Section 302(b)(1) of Division O of the Further Consolidated Appropriations Act, 2020 (Public Law 116-94) to Section 529(c)(9) of the Internal Revenue Code, relating to distributions for qualified education loan repayments, shall apply.

(h) (1) Section 529(c)(3)(E) of the Internal Revenue Code, relating to special rollovers to Roth IRAs from long-term qualified tuition programs, shall not apply.

(2) In the case of any distribution made under Section 529(c)(3)(E) of the Internal Revenue Code, relating to the special rollover to Roth IRAs from long-term qualified tuition programs, treated for federal income tax purposes as a “qualified rollover contribution” under Section 408A(e)(1)(C) of the Internal Revenue Code, the amount of that distribution shall, notwithstanding Section 529 or Section 408A of the Internal Revenue Code to the contrary, be includable in the gross income of the distributee in the manner as provided under Section 72 of the Internal Revenue Code.

(3) Any distribution includable in the gross income of a distributee under paragraph (2) shall not affect the exempt status of the qualified tuition program under Section 529 of the Internal Revenue Code for purposes of this part.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 19. (SB 711) Effective October 1, 2025.)


text:
Section 529 of the Internal Revenue Code, relating to qualified state tuition programs, shall apply, except as otherwise provided.

(a) Section 529(a) of the Internal Revenue Code is modified as follows:

(1) By substituting the phrase “under this part and Part 11 (commencing with Section 23001)” in lieu of the phrase “under this subtitle.”

(2) By substituting “Article 2 (commencing with Section 23731)” in lieu of “Section 511.”

(b) A copy of the report required to be filed with the Secretary of the Treasury under Section 529(d) of the Internal Revenue Code shall be filed with the Franchise Tax Board at the same time and in the same manner as specified in that section.

(c) (1) The amendments made by Section 302(a)(1) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529(e) of the Internal Revenue Code, relating to other definitions and special rules, shall apply except as otherwise provided.

(2) The amendments made by Section 302(b)(1) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529(c)(3) of the Internal Revenue Code, relating to distributions, shall apply, except as otherwise provided.

(3) The amendments made by Section 302(c)(1) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529(c)(3)(D) of the Internal Revenue Code, relating to special rule for contributions of refunded amounts, shall apply, except as otherwise provided.

(d) (1) The amendments made by Section 11025(a) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 529(c)(3)(C) of the Internal Revenue Code, relating to change in beneficiaries or programs, shall apply, except as otherwise provided.

(2) (A) The amendments made by Section 11032(a)(1) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 529(c) of the Internal Revenue Code, relating to tax treatment of designated beneficiaries and contributors, shall not apply, except as otherwise provided.

(B) The amendments made by Section 11032(a)(2) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 529(e)(3)(A) of the Internal Revenue Code, relating to qualified higher education expenses, shall not apply, except as otherwise provided.

(C) In the case of any distribution made under Section 529(e)(3)(A) of the Internal Revenue Code, as amended by Section 11032(a)(2) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), that would be treated for federal income tax purposes as a “qualified higher education expense” under Section 529(c)(7) of the Internal Revenue Code, as added by Section 11032(a)(1) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), the amount of that distribution shall, notwithstanding anything in Section 529 of the Internal Revenue Code to the contrary, be includable in the gross income of the distributee in the manner as provided under Section 72 of the Internal Revenue Code.

(D) Any distribution includable in the gross income of a distributee under subparagraph (C) shall not affect the exempt status of the qualified tuition program under Section 529 of the Internal Revenue Code for purposes of this part.

(e) (1) For taxable years beginning on or after January 1, 2021, the amendments made by Section 302(a) of Division O of the Further Consolidated Appropriations Act, 2020 (Public Law 116-94) to Section 529(c)(8) of the Internal Revenue Code, relating to distributions for certain expenses associated with registered apprenticeship programs, shall apply.

(2) For taxable years beginning on or after January 1, 2021, the amendments made by Section 302(b)(1) of Division O of the Further Consolidated Appropriations Act, 2020 (Public Law 116-94) to Section 529(c)(9) of the Internal Revenue Code, relating to distributions for qualified education loan repayments, shall apply.

(f) (1) Section 529(c)(3)(E) of the Internal Revenue Code, relating to special rollovers to Roth IRAs from long-term qualified tuition programs, shall not apply.

(2) In the case of any distribution made under Section 529(c)(3)(E) of the Internal Revenue Code, relating to the special rollover to Roth IRAs from long-term qualified tuition programs, treated for federal income tax purposes as a “qualified rollover contribution” under Section 408A(e)(1)(C) of the Internal Revenue Code, the amount of that distribution shall, notwithstanding Section 529 or Section 408A of the Internal Revenue Code to the contrary, be includable in the gross income of the distributee in the manner as provided under Section 72 of the Internal Revenue Code.

(3) Any distribution includable in the gross income of a distributee under paragraph (2) shall not affect the exempt status of the qualified tuition program under Section 529 of the Internal Revenue Code for purposes of this part.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 20. (SB 711) Effective October 1, 2025.)


text:
For taxable years beginning on or after January 1, 2016, Section 529A of the Internal Revenue Code, relating to qualified ABLE programs, added by Section 102 of Division B of Public Law 113-295, shall apply, except as otherwise provided.

(a) Section 529A(a) of the Internal Revenue Code is modified as follows:

(1) By substituting the phrase “under this part and Part 11 (commencing with Section 23001)” in lieu of the phrase “under this subtitle.”

(2) By substituting “Article 2 (commencing with Section 23731)” in lieu of “Section 511.”

(b) Section 529A(c)(3)(A) of the Internal Revenue Code is modified by substituting “2.5 percent” in lieu of “10 percent.”

(c) A copy of the report required to be filed with the Secretary of the Treasury under Section 529A(d) of the Internal Revenue Code, relating to reports, shall be filed with the Franchise Tax Board at the same time and in the same manner as specified in that section.

(d) (1) The amendments made by Section 303(a) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 529A(b)(1) of the Internal Revenue Code, relating to qualified ABLE programs, shall apply, except as otherwise provided.

(2) The amendments made by Section 303(b) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Sections 529A(d)(3) and 529A(e) of the Internal Revenue Code, relating to qualified ABLE programs shall apply, except as otherwise provided.

(3) The amendments made by Section 303(c) of Division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Sections 529A(d)(4) and 529A(c)(1)(C)(i) of the Internal Revenue Code, relating to qualified ABLE program, shall apply, except as otherwise provided.

(e) The amendments made by Section 11024(a) of the Tax Cuts and Jobs Act (Public Law 115-97) to Section 529A(b)(2)(B) of the Internal Revenue Code, relating to qualified ABLE programs, shall apply, except as otherwise provided.

(f) (1) For taxable years beginning on or after January 1, 2026, the amendments made by Section 124 of the Consolidated Appropriations Act, 2023 (Public Law 117-328) to Section 529A(e) of the Internal Revenue Code, relating to qualified ABLE programs, shall apply, except as otherwise provided.

(2) (A) For the purpose of complying with Section 41, as it relates to the tax expenditures established by this subdivision and subdivision (f) of Section 23711.4 (hereafter the “tax expenditures,”) the Legislature finds and declares as follows:

(i) The goal, purpose, and objective of the tax expenditures are to encourage and assist individuals and families to save private funds for purposes of supporting persons with disabilities to maintain their health, independent, and quality of life.

(ii) The performance indicators for the Legislature to use in determining whether the tax expenditures are achieving their stated goal shall be the number of ABLE accounts that are created for individuals who are made newly eligible by the raised age limit.

(B) No later than January 1, 2030, the Treasurer’s office shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of ABLE accounts that are created for individuals who are made newly eligible by the raised age limit.

(g) For taxable years beginning on or after January 1, 2026, the amendments made by Section 70204(a)(2) of Public Law 119-21 to Sections 529A(b)(2)(B), relating to cash contributions, and 529A(b)(6), relating to prohibition on excess contributions, of the Internal Revenue Code shall apply.

history: (History: Amended by Stats. 2026, Ch. 85, Sec. 3. (SB 180) Effective July 13, 2026.)


text:
(a) Pursuant to Section 206 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 526), the period of a servicemember’s military service may not be included in computing any period limited by law, regulation, or order for the bringing of any action or proceeding under this part, Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), by or against the servicemember or the servicemember’s heirs, executors, administrators, or assigns.

(b) Section 19521 is modified to provide that, pursuant to Section 207 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 527), the maximum rate of interest on any underpayment incurred by a servicemember, or the servicemember and the servicemember’s spouse jointly, before the servicemember enters military service may not bear interest at a rate in excess of 6 percent per year during the period of military service.

(c) Pursuant to Section 511 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 571):

(1) A servicemember not domiciled in this state does not become a resident of this state by reason of being present in this state solely in compliance with military orders.

(2) Compensation for military service of a servicemember not domiciled in this state is not income for services performed or from sources within this state.

(3) The military compensation of a servicemember not domiciled in this state may not be used to increase the tax liability imposed on other income of that servicemember or that servicemember’s spouse.

(4) A Native American servicemember whose legal residence or domicile is a federal Indian reservation shall be treated as living on the federal Indian reservation and the compensation of that servicemember for military service shall be deemed to be income derived wholly from federal Indian reservation sources.

(d) For purposes of this part and Part 10.2 (commencing with Section 18401), in the case of a servicemember not domiciled in this state, all of the following shall apply:

(1) Compensation for military service shall not be included in any of the following:

(A) Gross income of that servicemember or the spouse of that servicemember.

(B) “Entire taxable income” for purposes of computing the tax imposed under subdivision (b) or (d) of Section 17041.

(C) “Alternative minimum taxable income” for purposes of computing tax imposed under subparagraph (B) of paragraph (3) of subdivision (b) of Section 17062.

(2) Paragraph (2) of subdivision (h) of Section 17024.5 is modified to provide that references to “adjusted gross income” for purposes of computing limitations based upon adjusted gross income, shall mean the amount required to be shown as adjusted gross income on the federal tax return for the same taxable year reduced by the amount of the compensation for military service for that taxable year of a servicemember not domiciled in this state.

(e) (1) “Federal Indian reservation,” “servicemember,” “military service,” “period of military service,” and “compensation for military service” shall have the same meanings as applicable for purposes of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 501 et seq.).

(2) “Native American” has the same meaning as the term “Indian” for purposes of applying Section 511(e) of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 571(e)) for federal purposes.

(f) The amendments made to this section by the act adding this subdivision shall apply to any taxable year for which the period for making assessments or allowing a claim for refund or credit has not expired as of December 19, 2003.

history: (History: Repealed and added by Stats. 2004, Ch. 388, Sec. 2. Effective September 9, 2004.)


text: Gross income does not include income derived from an obligation of a Community Energy Authority established under the provisions of Part 3 (commencing with Section 52000) of Division 1 of Title 5 of the Government Code.

history: (History: Added by Stats. 1983, Ch. 498, Sec. 140. Effective July 28, 1983. Operative January 1, 1985, pursuant to Sec. 220 of Ch. 498.)


text: Gross income does not include any amounts received as a premium assistance subsidy under Title 25 (commencing with Section 100800) of the Government Code.

history: (History: Added by Stats. 2019, Ch. 38, Sec. 36. (SB 78) Effective June 27, 2019.)


text:
(a) Notwithstanding any other law or guidance, for taxable years beginning on or after January 1, 2023, gross income does not include either of the following:

(1) Any funds deposited, any investment returns accrued, and any accrued interest in a trust account under the California Hope, Opportunity, Perseverance, and Empowerment (HOPE) for Children Trust Account Act (Chapter 16.1 (commencing with Section 18997.5) of Part 6 of Division 9 of the Welfare and Institutions Code).

(2) Any funds from the trust account described in paragraph (1) that is withdrawn or transferred by an eligible youth.

(b) Notwithstanding any other law or guidance, for taxable years beginning on or after January 1, 2023, funds deposited, any investment returns accrued, and any accrued interest in a trust account under the California Hope, Opportunity, Perseverance, and Empowerment (HOPE) for Children Trust Account Act (Chapter 16.1 (commencing with Section 18997.5) of Part 6 of Division 9 of the Welfare and Institutions Code) and any funds from a trust account that is withdrawn or transferred by an eligible youth shall not be considered earned income for purposes of eligibility for the California Earned Income Tax Credit pursuant to Section 17052 and the Young Child Tax Credit pursuant to Section 17052.1.

history: (History: Added by Stats. 2022, Ch. 569, Sec. 54. (AB 156) Effective September 27, 2022.)


text: Sections 111(b) and 111(c) of the Internal Revenue Code, relating to credits and treatment of credit carryovers, shall be applicable with respect to credits allowable under this part.

history: (History: Added by Stats. 1988, Ch. 1465, Sec. 5. Effective September 28, 1988. Applicable to taxable years beginning on or after January 1, 1988, by Sec. 77 of Ch. 1465.)


text:
(a) For purposes of the following provisions of the Internal Revenue Code, a qualified hazardous duty area shall be treated in the same manner as if it were a combat zone (as determined under Section 112 of the Internal Revenue Code):

(1) Section 2 (a)(3) (relating to a special rule where a deceased spouse was in missing status).

(2) Section 112 (relating to certain combat zone compensation of members of the Armed Forces).

(3) Section 692 (relating to income taxes of members of Armed Forces upon death).

(4) Section 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).

(b) “Qualified hazardous duty area” means Bosnia and Herzegovina, Croatia, or Macedonia, if, as of March 20, 1996, any member of the Armed Forces of the United States is entitled to special pay under Section 310 of Title 37 of the United States Code (relating to special pay; duty subject to hostile fire or imminent danger) for services performed in that country. “Qualified hazardous duty area” includes any country only during the period that entitlement is in effect. Solely for purposes of applying Section 7508 of the Internal Revenue Code, in the case of an individual who is performing services as part of Operation Joint Endeavor outside the United States while deployed away from the individual’s permanent duty station, the term “qualified hazardous duty area” includes, during the period for which that entitlement is in effect, any area in which those services are performed.

history: (History: Amended by Stats. 1999, Ch. 987, Sec. 24. Effective October 10, 1999.)


text: Sections 103 and 141 to 150, inclusive, of the Internal Revenue Code, relating to interest on governmental obligations, shall not apply.

history: (History: Amended by Stats. 1999, Ch. 987, Sec. 25. Effective October 10, 1999.)


text:
(a) Section 108(b)(2)(B) of the Internal Revenue Code, relating to general business credit, is modified by substituting “this part” in lieu of “Section 38 (relating to general business credit).”

(b) Section 108(b)(2)(G) of the Internal Revenue Code, relating to foreign tax credit carryovers, shall not apply.

(c) Section 108(b)(3)(B) of the Internal Revenue Code, relating to credit carryover reduction, is modified by substituting “11.1 cents” in lieu of “3313 cents” in each place in which it appears. In the case where more than one credit is allowable under this part, the credits shall be reduced on a pro rata basis.

(d) Section 108(g)(3)(B) of the Internal Revenue Code, relating to adjusted tax attributes, is modified by substituting “($9)” in lieu of “($3).”

(e) (1) If a taxpayer makes an election for federal income tax purposes under Section 108(c) of the Internal Revenue Code, relating to treatment of discharge of qualified real property business indebtedness, a separate election shall not be allowed under paragraph (3) of subdivision (e) of Section 17024.5 and the federal election shall be binding for purposes of this part.

(2) If a taxpayer has not made an election for federal income tax purposes under Section 108(c) of the Internal Revenue Code, relating to treatment of discharge of qualified real property business indebtedness, then the taxpayer shall not be allowed to make that election for purposes of this part.

(f) Section 108(i) of the Internal Revenue Code, relating to deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument, shall not apply.

history: (History: Amended by Stats. 2015, Ch. 359, Sec. 10. (AB 154) Effective September 30, 2015. Applicable to taxable years beginning on or after January 1, 2015, as provided in Sec. 41 of Stats. 2015, Ch. 359.)


text:
(a) (1) Section 108(a)(1)(E) of the Internal Revenue Code is modified to provide that the amount excluded from gross income shall not exceed five hundred thousand dollars ($500,000) (two hundred fifty thousand dollars ($250,000) in the case of a married individual filing a separate return).

(2) Section 108(a)(1)(E) of the Internal Revenue Code is modified by substituting “before January 1, 2015,” in lieu of clauses (i) and (ii).

(b) Section 108(h)(2) of the Internal Revenue Code is modified by substituting the phrase “(within the meaning of section 163(h)(3)(B), applied by substituting ‘$800,000 ($400,000’ for ‘$1,000,000 ($500,000’ in clause (ii) thereof)” for the phrase “(within the meaning of section 163(h)(3)(B), applied by substituting ‘$2,000,000 ($1,000,000’ for ‘$1,000,000 ($500,000’ in clause (ii) thereof)” contained therein.

(c) This section shall apply to discharges of indebtedness occurring on or after January 1, 2007, and, notwithstanding any other law to the contrary, no penalties or interest shall be due with respect to the discharge of qualified principal residence indebtedness during the 2007 or 2009 taxable year regardless of whether or not the taxpayer reports the discharge on their return for the 2007 or 2009 taxable year.

(d) The amendments made by Section 202 of the American Taxpayer Relief Act of 2012 (Public Law 112-240) to Section 108 of the Internal Revenue Code shall apply.

(e) The changes made to this section by Section 1 of Chapter 152 of the Statutes of 2014 shall apply to discharges of indebtedness that occur on or after January 1, 2013, and before January 1, 2014, and, notwithstanding any other law, no penalties or interest shall be due with respect to the discharge of qualified principal residence indebtedness during the 2013 taxable year, regardless of whether the taxpayer reports the discharge on their income tax return for the 2013 taxable year.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 21. (SB 711) Effective October 1, 2025.)


text:
(a) Section 108(f)(5) of the Internal Revenue 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) (1) 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.

(2) (A) For purposes of complying with Section 41, as it pertains to this subdivision, the Legislature finds and declares as follows:

(i) The specific goal, purpose, and objective of the exclusion is to provide financial relief to taxpayers with discharges of student loan debt.

(ii) The performance indicators for the Legislature to use in determining if the exclusion has achieved this goal shall be the number of taxpayers excluding discharge of indebtedness income based on this subdivision, and the total dollar value of income so excluded.

(B) The Legislative Analyst’s Office shall, no later than October 1, 2026, submit a report to the Legislature, in accordance with Section 9795 of the Government Code, that estimates the number of taxpayers with discharged student loan debt excluded from income, and estimates the total dollar value of the debt discharged, to the extent data is available.

history: (History: Amended by Stats. 2024, Ch. 80, Sec. 120. (SB 1525) Effective January 1, 2025.)


text:
(a) A regulated investment company, as defined in Section 851 of the Internal Revenue Code, relating to definition of regulated investment company, or series thereof, is qualified to pay exempt-interest dividends to its shareholders if, at the close of each quarter of its taxable year, at least 50 percent of the value of its total assets consists of obligations which, when held by an individual, the interest therefrom is exempt from taxation by this state.

(b) For purposes of this section:

(1) “Aggregate reported amount” means the aggregate amount of dividends reported by the company under paragraph (4) as exempt-interest dividends for the taxable year (including exempt-interest dividends paid after the close of the taxable year described in Section 855 of the Internal Revenue Code).

(2) “Excess reported amount” means the excess of the aggregate reported amount over the exempt interest of the company for the taxable year.

(3) “Exempt interest” means, with respect to any regulated investment company, the excess of the amount of interest received by it during its taxable year on obligations, interest on which, if held by an individual, is exempt from taxation by this state, over the amounts that, if it were treated as an individual, would be disallowed as deductions under Section 17280 of this part or Section 171(a)(2) of the Internal Revenue Code.

(4) (A) Except as provided in subparagraph (B), “exempt-interest dividend” means any dividend or part thereof (other than a capital gain dividend) paid by a regulated investment company or series thereof and reported by the company as an exempt-interest dividend in written statements furnished to its shareholders.

(B) If the aggregate reported amount with respect to the company for any taxable year exceeds the exempt interest of the company for such taxable year, an exempt-interest dividend is the excess of the reported exempt-interest dividend amount over the excess reported amount which is allocable to such reported exempt-interest dividend amount.

(C) (i) Except as provided in clause (ii), the excess reported amount (if any) which is allocable to the reported exempt-interest dividend amount is that portion of the excess reported amount which bears the same ratio to the excess reported amount as the reported exempt-interest dividend amount bears to the aggregate reported amount.

(ii) In the case of a taxable year which does not begin and end in the same calendar year, if the post-December reported amount equals or exceeds the excess reported amount for such taxable year, clause (i) shall be applied by substituting “post-December reported amount” for “aggregate reported amount” and no excess reported amount shall be allocated to any dividend paid on or before December 31 of such taxable year.

(5) “Post-December reported amount” means the aggregate reported amount determined by taking into account only dividends paid after December 31 of the taxable year.

(6) “Reported exempt-interest dividend amount” means the amount reported to its shareholders under paragraph (4) as an exempt-interest dividend.

(7) “Series” means a segregated portfolio of assets, the beneficial interest in which is owned by the holders of a class or series of stock of the regulated investment company that is preferred over all other classes or series with respect to that portfolio of assets.

(8) “Value” means, with respect to securities (other than those of majority-owned subsidiaries) for which market quotations are readily available, the market value of those securities; and with respect to other securities and assets, fair market value as determined in good faith by the board of directors or trustees, except that in the case of securities of majority-owned subsidiaries that are investment companies, as defined in the Investment Company Act of 1940, that fair value shall not exceed market value or asset value, whichever is higher.

(c) An exempt-interest dividend shall be treated by recipients thereof as an item of interest excludable from income.

(d) In the case of a qualified fund of funds, as defined in Section 852(g)(2) of the Internal Revenue Code, relating to fund of funds, that fund shall be qualified to pay tax-exempt dividends to its shareholders without regard to whether that fund satisfies the requirements of subdivision (a).

(e) The amendments made to this section by the act adding this subdivision shall apply to taxable years beginning on or after December 23, 2010.

history: (History: Amended by Stats. 2011, Ch. 490, Sec. 2. (AB 1423) Effective October 6, 2011.)


text: The compensation of employees of a foreign country shall be determined in accordance with Section 893 of the Internal Revenue Code.

history: (History: Repealed and added by Stats. 1983, Ch. 488, Sec. 26. Effective July 28, 1983.)


text:
(a) Gross income does not include any income which is received as a reward from a crime hotline that is authorized by any governmental entity.

(b) For the purposes of this section, “crime hotline” means any method of direct communication established by a government agency or a private, nonprofit organization exempt from taxation under Section 23701d for the purpose of permitting individuals to report criminal activity to that agency or organization, or any other designated government agency.

(c) This section shall not apply to an employee of an agency or organization establishing or operating a crime hotline or to an employee of an organization that has contributed to the reward described in subdivision (a).

history: (History: Added by Stats. 1994, Ch. 481, Sec. 1. Effective September 12, 1994.)