text:
(a) Gross income does not include compensation or the fair market value of any other benefit, except salary or wages, received by an employee from an employer for participation in any ridesharing arrangement in California, including those specified in subdivision (b).

(b) For purposes of this section, compensation or the fair market value of any other benefit received for participation in a ridesharing arrangement in California includes compensation or other benefit received for:

(1) Commuting in a vanpool.

(2) Commuting in a private commuter bus or buspool.

(3) A transit pass for use by the employee or his or her dependents, other than transit passes for use by elementary and secondary school students who are dependents of the employee.

(4) Commuting in a subscription taxipool.

(5) Commuting in a carpool.

(6) Free or subsidized parking.

(7) An employee’s bicycling to or from his or her place of employment.

(8) Commuting by ferry.

(9) The use of an alternative transportation method, other than a method otherwise specified in this subdivision, that reduces the use of a motor vehicle by a single occupant to travel to or from that individual’s place of employment.

(10) Travel to or from a telecommuting facility.

(c) For purposes of this section:

(1) “Vanpool” means seven or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry 7 to 15 adults, including the driver, that is used to transport those persons who commute to and from work on a regular basis.

(2) “Transit pass” means any purchase of transit rides that entitles the holder to any number of transit rides to and from the workplace, whether at a discount rate or the base fare rate.

(3) “Transit” means transportation service for use by the general public that utilizes buses, railcars, or ferries with a seating capacity of 16 or more persons.

(4) “Subscription taxipool” means a type of service in which employers or groups of employees contract with a public or private taxi operator to provide daily commuter service for a group of preassembled subscribers on a prepaid or daily fare basis following a relatively fixed route and schedule tailored to meet the needs of the subscribers.

(5) “Ridesharing arrangement” means the transportation of persons in a motor vehicle where that transportation is incidental to another purpose of the driver. The term includes ridesharing arrangements known as carpools, vanpools, and buspools.

(6) “Carpool” means two or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry less than seven adults, including the driver.

(7) “Buspool” means 16 or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry more than 15 adult passengers.

(8) “Private commuter bus” means a highway vehicle which meets all of the following criteria:

(A) Has a seating capacity of at least seven adults, including the driver.

(B) At least 50 percent of the mileage of which can be reasonably expected to be used for the purpose of transporting employees to and from work.

(C) Is acquired by the taxpayer on or after the date of enactment of this section.

(D) With respect to which the taxpayer makes an election under this paragraph on his or her return for the taxable year in which the vehicle is placed in service.

(9) “Free or subsidized parking” means the benefit received from an employer for parking while participating in a ridesharing arrangement within California.

(10) “Alternative commute program” means any alternative transportation method or program the purpose of which is to reduce the use of a motor vehicle by a single occupant to travel to and from that individual’s place of employment.

history: (History: Amended by Stats. 1994, Ch. 622, Sec. 3. Effective January 1, 1995.)


kind: section

code: RTC

text: Section 132(f)(8) of the Internal Revenue Code, relating to suspension of qualified bicycle commuting reimbursement exclusion, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 22. (SB 711) Effective October 1, 2025.)

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: Section 132(g)(2) of the Internal Revenue Code, relating to qualified moving expense reimbursement suspension for taxable years 2018 to 2025, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 23. (SB 711) Effective October 1, 2025.)

article: 3. Items Specifically Excluded from Gross Income


text:
(a) Gross income of an employee does not include any amounts, not exceeding an aggregate amount of five thousand two hundred fifty dollars ($5,250) per calendar year, that is paid or incurred by the employer for educational assistance to the employee pursuant to an educational assistance program.

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

(1) “Educational assistance” means the payment by an employer of expenses incurred by or on behalf of an employee for the employee’s education, and includes, but is not limited to, payments for books, supplies, equipment, tuition, and fees, and similar payments. “Educational assistance” includes the provision by an employer of courses of instruction for an employee, including the provision of books, supplies, and equipment. “Educational assistance” does not include any payment for, or the provision of, any of the following:

(A) Any tools or supplies that may be retained by the employee after completion of a course of instruction.

(B) Any meals, lodging, or transportation.

(C) Any course or education involving sports, games, or hobbies.

(D) Any course or education taken at the graduate level of a kind normally taken by an individual pursuing a program leading to a law, business, medical, or other advanced academic or professional degree. This subparagraph applies only to any course or education taken at the graduate level beginning after June 30, 1996, and before January 1, 2000.

(2) “Educational assistance program” means a separate written plan of an employer for the exclusive benefit of his or her employees to provide those employees with educational assistance. The program shall meet the following requirements:

(A) The program benefits employees who qualify under a classification established by the employer and found by the Franchise Tax Board not to be discriminatory in favor of employees who are highly compensated employees (within the meaning of Section 414(q) of the Internal Revenue Code) or their dependents. For purposes of this subparagraph, there shall be excluded from consideration employees who are not included in the program and who are included in a unit of employees covered by an agreement that the Franchise Tax Board finds to be a collective bargaining agreement between employee representatives and one or more employers, if there is evidence that educational assistance benefits were the subject of good faith bargaining between the employee representatives and the employer or employers.

(B) Not more than 5 percent of the amounts paid or incurred by the employer for educational assistance during the year may be provided for the class of individuals who are owners (or their spouses or dependents), each of whom, on any day of the year, owns more than 5 percent of the capital or profits interest in the employer.

(C) The program does not provide eligible employees with a choice between educational assistance and other remuneration includable in gross income. For purposes of this section, the business practices of the employer, as well as the written program, shall be taken into account.

(D) The program need not be funded.

(E) Reasonable notification of the availability and terms of the program is provided to eligible employees.

(3) “Employee” includes self-employed individuals within the meaning of Section 401(c)(1) of the Internal Revenue Code.

(c) For purposes of this section:

(1) Any individual who owns the entire interest in an unincorporated trade or business shall be treated as his or her own employee.

(2) A partnership shall be treated as the employer of each partner who is an employee within the meaning of paragraph (3) of subdivision (b).

(3) (A) An educational assistance program shall not be considered to fail to meet any of the requirements of paragraph (2) of subdivision (b) on the sole basis of either of the following:

(i) Different utilization rates for the different types of educational assistance made available under the program.

(ii) Successful completion or attainment of a particular course grade is required for or considered in determining reimbursement under the program.

(B) This section shall not be construed to affect the deduction or inclusion in income of amounts that are paid or incurred or received as reimbursement for educational expenses under Section 117, 162, or 212 of the Internal Revenue Code.

(d) No deduction or credit shall be allowed to the employee with respect to any amount that the employee excludes from income pursuant to this section.

(e) Section 127 of the Internal Revenue Code shall not apply.

(f) This section shall apply with respect to expenses relating to courses beginning after June 30, 1996.

history: (History: Amended by Stats. 2000, Ch. 107, Sec. 6. Effective July 10, 2000.)


text: For taxable years beginning on or after January 1, 2026, Section 128 of the Internal Revenue Code, relating to employer contributions to 530A accounts, added by Section 70204(b)(1) of Public Law 119-21, shall apply.

history: (History: Added by Stats. 2026, Ch. 85, Sec. 4. (SB 180) Effective July 13, 2026.)


text: For taxable years beginning on or after January 1, 2026, Section 139J of the Internal Revenue Code, relating to certain contributions to 530A accounts, added by Section 70204(c)(1) of Public Law 119-21, shall apply.

history: (History: Added by Stats. 2026, Ch. 85, Sec. 5. (SB 180) Effective July 13, 2026.)


text:
Section 121 of the Internal Revenue Code, relating to exclusion of gain from sale of principal residence, is modified as follows:

(a) The two-year period in Section 121(a) of the Internal Revenue Code shall be reduced by the period of the taxpayer’s service, not to exceed 18 months, in the Peace Corps during the five-year period ending on the date of the sale or exchange.

(b) If the taxpayer is prohibited from filing a joint return pursuant to Section 18521, Section 121(b)(2)(A) of the Internal Revenue Code shall nevertheless be treated as being satisfied if the taxpayer files a joint return for federal income tax purposes for the same taxable year. However, in no instance shall the total amount excludable from gross income under Section 121(a) of the Internal Revenue Code with respect to any sale or exchange exceed the maximum amount allowed by Section 121(b) of the Internal Revenue Code.

(c) (1) If a taxpayer has, at any time, made an election for federal purposes under Section 121(f) of the Internal Revenue Code not to have Section 121 of the Internal Revenue Code apply to a sale or exchange, Section 121 of the Internal Revenue Code shall not apply to that sale or exchange for state purposes, a separate election for state purposes shall not be allowed under paragraph (3) of subdivision (e) of Section 17024.5, the federal election shall be binding for purposes of this part, and that election shall be treated as an election to include in gross income for purposes of this part all the gain from the sale or exchange of that property, including that amount which, but for that election, would have been excluded from income under Section 121(a) of the Internal Revenue Code for state purposes.

(2) If a taxpayer fails to make an election for federal purposes under Section 121(f) of the Internal Revenue Code to not have Section 121 of the Internal Revenue Code apply to a sale or exchange, no election under Section 121(f) of the Internal Revenue Code shall be allowed for state purposes, Section 121 of the Internal Revenue Code shall apply to that sale or exchange for state purposes, and a separate election for state purposes shall not be allowed under paragraph (3) of subdivision (e) of Section 17024.5.

(d) (1) If a taxpayer has, at any time, made an election for federal purposes under Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public Law 105-34), relating to sales before date of enactment, or Section 312(d)(4) of that act, relating to binding contracts, to not have the amendments made by Section 312 of the Taxpayer Relief Act of 1997 (Public Law 105-34) apply to a sale or exchange, the amendments made by the act adding this subdivision shall not apply to that sale or exchange, Sections 1, 4, and 6 of Chapter 610 of the Statutes of 1997 shall not apply to that sale or exchange, a separate election for state purposes 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 fails to make an election for federal purposes under Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public Law 105-34), relating to sales before date of enactment, or Section 312(d)(4) of that act, relating to binding contracts, to not have the amendments made by Section 312 of the Taxpayer Relief Act of 1997 (Public Law 105-34) apply to a sale or exchange, an election under Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public Law 105-34), relating to sales before date of enactment, or Section 312(d)(4) of that act, relating to binding contracts, shall not be allowed for state purposes, the amendments made by the act adding this subdivision shall apply to that sale or exchange, Sections 1, 4, and 6 of Chapter 610 of the Statutes of 1997 shall apply to that sale or exchange, and a separate election for state purposes shall not be allowed under paragraph (3) of subdivision (e) of Section 17024.5.

(e) (1) If a taxpayer has, at any time, made or revoked an election for federal purposes under Section 121(d)(9) of the Internal Revenue Code to suspend the running of the five-year period described in Sections 121(a), 121(c)(1)(B), and 121(d)(7) of the Internal Revenue Code, that election or revocation of election to suspend the five-year period under Section 121(d)(9) of the Internal Revenue Code shall be applicable for state purposes, a separate election or revocation of election for purposes of Section 121(d)(9) of the Internal Revenue Code may not be allowed under paragraph (3) of subdivision (e) of Section 17024.5, and the federal election or revocation of election shall be binding for purposes of this part.

(2) If a taxpayer fails to make an election for federal purposes under Section 121(d)(9) of the Internal Revenue Code to suspend the running of the five-year period described in Sections 121(a), 121(c)(1)(B), and 121(d)(7) of the Internal Revenue Code, that five-year period may not be suspended under Section 121(d)(9) of the Internal Revenue Code for state purposes, and a separate election for state purposes shall not be allowed under paragraph (3) of subdivision (e) of Section 17024.5.

(f) Section 121(d)(11) of the Internal Revenue Code, relating to property acquired from a decedent, shall not apply.

(g) The amendments made by Section 417 of the Tax Relief and Health Care Act of 2006 (Public Law 109-432) to Section 121(d)(9) of the Internal Revenue Code, relating to uniformed services, foreign service, and intelligence community, shall apply to sales or exchanges that occur on or after January 1, 2010.

(h) The amendments made by subdivision (a) of Section 7 of the Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) to Section 121 of the Internal Revenue Code, relating to exclusion of gain from sale of principal residence, shall apply to sales or exchanges that occur on or after January 1, 2010.

history: (History: Amended by Stats. 2010, Ch. 14, Sec. 15. (SB 401) Effective January 1, 2011.)


text: Gross income does not include any amount received for empty beverage containers by a consumer from a recycling center or recycling location as the recycling value, as defined in Chapter 2 (commencing with Section 14502) of Division 12.1 of the Public Resources Code.

history: (History: Added by Stats. 1986, Ch. 1290, Sec. 3. Effective September 29, 1986.)


text: Section 132(j)(8) of the Internal Revenue Code, relating to application of section to otherwise taxable educational or training benefits, is modified by substituting “which are not excludable under Section 17151” in lieu of “which are not excludable under Section 127”.

history: (History: Added by Stats. 1997, Ch. 611, Sec. 20. Effective October 3, 1997.)


text:
Gross income shall not include either of the following:

(a) (1) Any amount, including any interest or property, that is received as compensation in any taxable year by a taxpayer pursuant to the German Act Regulating Unresolved Property Claims, as amended (Gesetz zur Regelung offener Vermogensfragen).

(2) For purposes of this subdivision, the basis of any property received pursuant to the German Act Regulating Unresolved Property Claims shall be the fair market value of the property at the time of receipt by the taxpayer.

(b) (1) Any amount received by a taxpayer who is a Holocaust victim or the heir or beneficiary of a Holocaust victim as a result of a settlement of claims against any entity or individual for any recovered asset.

(2) For purposes of this subdivision:

(A) “Holocaust victim” means a person who was persecuted by Nazi Germany or any Axis regime during any period from 1933 to 1945, inclusive.

(B) “Recovered asset” means any asset of any type, including any bank deposits, insurance proceeds, or artwork owned by a Holocaust victim during any period from 1920 to 1945, inclusive, withheld from that Holocaust victim or his or her heirs or beneficiaries from and after 1945, and not recovered, returned, or otherwise compensated to a Holocaust victim or his or her heirs or beneficiaries until 1995, or thereafter. “Recovered asset” shall also include any interest earned on any of these assets.

history: (History: Amended (as added by Stats. 1996, Ch. 29) by Stats. 1998, Ch. 962, Sec. 1. Effective January 1, 1999.)


text: Gross income does not include any amount received as reparation payments paid by the German Foundation known as Remembrance, Responsibility, and the Future, or any other source of humanitarian reparations made for purposes of redressing the injustice done to persons who were required to perform slave or forced labor during World War II.

history: (History: Added by Stats. 2000, Ch. 685, Sec. 1. Effective September 27, 2000.)


text:
(a) Gross income shall not include any amount received as compensation in any taxable year by a taxpayer pursuant to Assembly Bill 110 of the 1999–2000 Regular Session.

(b) This section shall apply to taxable years beginning on or after January 1, 1999.

history: (History: Added by Stats. 1999, Ch. 619, Sec. 2. Effective October 10, 1999. Note: The Assembly Bill 110 referred to in the text became Ch. 619.)


text:
(a) Section 304(a) as added by Public Law 114-113, which is codified as Section 139F of the Internal Revenue Code, relating to certain amounts received by wrongfully incarcerated individuals, shall apply.

(b) This section shall apply to taxable years beginning before, on, or after January 1, 2018.

(c) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before January 1, 2018, 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 January 1, 2018.

history: (History: Added by Stats. 2017, Ch. 655, Sec. 1. (AB 454) Effective January 1, 2018.)


text:
(a) Section 139C of the Internal Revenue Code, relating to certain disability-related first responder retirement payments, shall apply.

(b) This section shall apply to amounts received with respect to taxable years beginning on or after January 1, 2027.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 24. (SB 711) Effective October 1, 2025.)


text: Gross income does not include any amount received as reparation payments paid by the Canadian government for the purpose of redressing the injustice done to persons of Japanese ancestry who were interned in Canada during World War II.

history: (History: Added by Stats. 1999, Ch. 471, Sec. 2. Effective September 23, 1999.)


text: Gross income shall not include any amount received in any taxable year by a claimant pursuant to Section 4904 of the Penal Code.

history: (History: Added by Stats. 2000, Ch. 630, Sec. 2. Effective January 1, 2001.)


text:
(a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income does not include any Chiquita Canyon elevated temperature landfill event payment amount received by a taxpayer.

(b) For purposes of this section:

(1) “Chiquita Canyon elevated temperature landfill event” means the elevated temperature landfill event, beginning on May 1, 2022, that occurred beneath the Chiquita Canyon Landfill in the County of Los Angeles, California.

(2) “Chiquita Canyon elevated temperature landfill event payment” means any amount received by a taxpayer on or after March 1, 2024, as compensation for loss, damages, expenses, relocation, suffering, loss in real property value, closing costs with respect to real property, including realtor commissions, or inconvenience, including access to real property, resulting from the Chiquita Canyon elevated temperature landfill event, if the amount was provided by either of the following:

(A) A federal, state, or local governmental agency.

(B) Waste Connections, Inc., any subsidiary, insurer, or agent of Waste Connections, Inc., or any person related to Waste Connections, Inc.

(c) The payor shall provide, upon request by the Franchise Tax Board, documentation of the Chiquita Canyon elevated temperature landfill event payment amount in the form and manner requested by the Franchise Tax Board.

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

history: (History: Added by Stats. 2025, Ch. 17, Sec. 15. (SB 132) Effective June 27, 2025. Repealed as of December 1, 2029, by its own provisions.)


text:
(a) Gross income does not include any of the following grant allocations:

(1) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the COVID-19 Relief Grant that is administered by the Office of Small Business Advocate, is funded by Executive Order No. E 20/21-182, and is described in a letter from the Department of Finance to the Joint Legislative Budget Committee, dated December 17, 2020, entitled, “Disaster Response-Emergency Operations Account Request—Increased Funding for the California Rebuilding Fund and Funding to Support a New COVID-19 Relief Grant for Small Businesses.”

(2) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the California Small Business COVID-19 Relief Grant Program established by Section 12100.83 of the Government Code.

(3) For taxable years beginning on or after September 1, 2020, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the California Venues Grant Program established by Section 12100.83.5 of the Government Code.

(4) For taxable years beginning on or after January 1, 2021, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program established by Section 12100.975 of the Government Code.

(b) Section 41 shall not apply to the exclusion allowed by this section.

(c) Notwithstanding any other law, the Franchise Tax Board may include in audits the grants referenced in this section.

(d) The Franchise Tax Board may adopt regulations that are necessary and appropriate to implement this section.

(e) 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 regulation, standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this section.

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

history: (History: Amended by Stats. 2022, Ch. 736, Sec. 4. (AB 152) Effective September 29, 2022. Repealed as of December 1, 2030, by its own provisions.)


text:
(a) For taxable years beginning on or after January 1, 2020, and before January 1, 2025, gross income does not include grant allocations received by a taxpayer pursuant to the California Microbusiness COVID-19 Relief Program that is administered by the Office of Small Business Advocate pursuant to Article 9 (commencing with Section 12100.90) of Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code.

(b) Section 41 shall not apply to the exclusion allowed by this section.

history: (History: Amended by Stats. 2023, Ch. 196, Sec. 22. (SB 143) Effective September 13, 2023.)


text:
(a) For taxable years beginning on or after January 1, 2020, gross income does not include any amount awarded as a restaurant revitalization grant pursuant to Section 9009c of Title 15 of the United States Code.

(b) (1) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2020, paragraph (2) of Section 9673 of the American Rescue Plan Act of 2021 (Public Law 117-2) shall apply, except as provided.

(2) Paragraph (2) of Section 9673 of the American Rescue Plan Act of 2021 (Public Law 117-2) is modified by substituting the phrase “provided by paragraph (1)” with “provided by this section.”

(c) 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.

(d) This section shall be operative for taxable years beginning on or after January 1, 2020.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 11. (SB 113) Effective February 9, 2022.)


text:
(a) For taxable years beginning on or after January 1, 2019, gross income does not include any amount awarded as a shuttered venue operator grant pursuant to Section 9009a of Title 15 of the United States Code.

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

(2) Subsection (d) 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 (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(c) For purposes of this section:

(1) “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).

(2) “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).

(d) This section shall be operative for taxable years beginning on or after January 1, 2019.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 12. (SB 113) Effective February 9, 2022.)


text: Section 343 of the Protecting Americans from Tax Hikes Act of 2015 (Public Law 114-113), relating to exclusion from gross income of certain coal power grants to non-corporate taxpayers, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 25. (SB 711) Effective October 1, 2025.)


text: Section 3 of the Federal Disaster Tax Relief Act of 2023 (Public Law 118-148), relating to exclusion from gross income for compensation for losses or damages resulting from certain wildfires, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 26. (SB 711) Effective October 1, 2025.)


text:
(a) Part VI of Subchapter B of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to itemized deductions for individuals and corporations, shall apply, except as otherwise provided.

(b) Part VII of Subchapter B of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to additional itemized deductions for individuals, shall apply, except as otherwise provided.

(c) Part IX of Subchapter B of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to items not deductible, shall apply, except as otherwise provided.

history: (History: Repealed and added by Stats. 1993, Ch. 873, Sec. 12. Effective October 6, 1993.)

article: 6. Deductions

path: 2. OTHER TAXES > 10. PERSONAL INCOME TAX > 3. Computation of Taxable Income > 6. Deductions


text:
(a) Section 174 of the Internal Revenue Code as it read on January 1, 2015, relating to amortization of research and experimental expenditures, shall apply.

(b) Section 217(k) of the Internal Revenue Code, relating to the suspension of the moving expense deduction for taxable years 2018 to 2025, shall not apply.

(c) The amendments made by Section 13304 of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 274 of the Internal Revenue Code, relating to limitation on deduction by employers of expenses for fringe benefits, shall not apply.

(d) The amendments made by Section 13202(a) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 280F of the Internal Revenue Code, relating to limitation on depreciation for luxury automobiles; limitation where certain property used for personal purposes, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 27. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text:
(a) The amendments made by Section 13531(a) of the Tax Cuts and Jobs Act (Public Law 115-97) to add Section 162(r) to the Internal Revenue Code, relating to the disallowance of FDIC premiums paid by certain large financial institutions, shall apply, except as otherwise provided.

(b) For purposes of this section, Article 9 (commencing with Section 23361) of Chapter 2 of Part 11 shall not apply.

history: (History: Added by Stats. 2019, Ch. 39, Sec. 8. (AB 91) Effective July 1, 2019.)

article: 6. Deductions


text:
(a) Section 215 of the Internal Revenue Code, relating to alimony, etc., payments, as it read on January 1, 2015, shall apply, except as otherwise provided.

(b) Subdivision (a) shall not apply for any divorce or separation instrument executed after December 31, 2025, or for any divorce or separation instrument executed on or before December 31, 2025, and modified after that date, if the modification expressly provides that the amendments made by this subdivision apply to such modification.

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

history: (History: Added by Stats. 2025, Ch. 231, Sec. 28. (SB 711) Effective October 1, 2025. Repealed as of December 1, 2027, by its own provisions.)

article: 6. Deductions


text: Section 179B of the Internal Revenue Code, relating to deductions for capital costs incurred in complying with Environmental Protection Agency sulfur regulations, shall not apply.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 19. Effective October 7, 2005.)

article: 6. Deductions


text: Section 181 of the Internal Revenue Code, relating to treatment of certain qualified film and television productions, shall not apply.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 20. Effective October 7, 2005.)

article: 6. Deductions


text: Section 199A of the Internal Revenue Code, relating to qualified business income, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 29. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: The amendments made by Section 302(b)(2) of Division O of the Further Consolidated Appropriations Act, 2020 (Public Law 116-94) to Section 221(e)(1) of the Internal Revenue Code, relating to coordination with deduction for student loan interest, shall apply.

history: (History: Added by Stats. 2021, Ch. 557, Sec. 4. (AB 340) Effective January 1, 2022.)

article: 6. Deductions


text: There shall be allowed to an employer as an ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business (as provided in Section 162(a) of the Internal Revenue Code), the expenses involved in carrying out a parking cash-out program, as defined by subdivision (f) of Section 65088.1 of the Government Code.

history: (History: Added by Stats. 1992, Ch. 554, Sec. 7. Effective January 1, 1993.)

article: 6. Deductions


text:
For purposes of applying limitations on the deductions described in this section, any reference to “compensation” or “earned income” shall be a reference to the amount required to be used for purposes of limiting the deduction in computing federal income tax for the same taxable year.

(a) The deduction allowed by Section 219 of the Internal Revenue Code.

(b) The deductions allowed by Sections 162(l) and 404 of the Internal Revenue Code in the case of an individual who is an employee within the meaning of Section 401(c)(1) of the Internal Revenue Code.

history: (History: Added by Stats. 1996, Ch. 473, Sec. 1. Effective September 13, 1996.)

article: 6. Deductions


text:
(a) Section 165(h)(3) of the Internal Revenue Code, relating to special rules for losses in federally declared disasters, shall not apply.

(b) Section 165(h)(5) of the Internal Revenue Code, relating to limitation for taxable years 2018 to 2025, shall not apply.

(c) The amendments by Section 11028(c) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 165 of the Internal Revenue Code, relating to special rules for personal casualty losses related to 2016 major disaster, shall not apply.

(d) The amendments made by Section 304 of Division EE of Title III of the Consolidated Appropriations Act, 2021 (Public Law 116-260) to Section 165(h) of the Internal Revenue Code, relating to qualified disaster-related personal casualty losses, shall not apply.

(e) Section 2 of the Federal Disaster Tax Relief Act of 2023 (Public Law 118-148), relating to extension of rules for treatment of certain disaster-related personal casualty losses, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 30. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: The amendments made by Section 11050 of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 165(d) of the Internal Revenue Code, relating to wagering losses, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 31. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text:
(a) For purposes of Section 17201, Section 170 of the Internal Revenue Code, relating to charitable, etc., contributions and gifts, shall be applied to allow a taxpayer to elect to treat any contribution described in subdivision (b) made in January 2005, as if that contribution was made on December 31, 2004, and not in January 2005.

(b) A contribution is described in this subdivision if that contribution is a cash contribution made for the relief of victims in areas affected by the December 26, 2004, Indian Ocean tsunami for which a charitable contribution deduction is allowable under Section 17201.

history: (History: Amended by Stats. 2010, Ch. 14, Sec. 17. (SB 401) Effective January 1, 2011.)

article: 6. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses resulting from any of the following disasters:

(1) Forest fire or any other related casualty occurring in 1985 in California.

(2) Storm, flooding, or any other related casualty occurring in 1986 in California.

(3) Any loss sustained during 1987 as a result of a forest fire or any other related casualty.

(4) Earthquake, aftershock, or any other related casualty occurring in 1987 in California.

(5) Earthquake, aftershock, or any other related casualty occurring in 1989 in California.

(6) Any loss sustained during 1990 as a result of fire or any other related casualty in California.

(7) Any loss sustained as a result of the Oakland/Berkeley Fire of 1991, or any other related casualty.

(8) Any loss sustained as a result of storm, flooding, or any other related casualty occurring in February 1992 in California.

(9) Earthquake, aftershock, or any other related casualty occurring in April 1992 in the County of Humboldt.

(10) Riots, arson, or any other related casualty occurring in April or May 1992 in California.

(11) Any loss sustained as a result of the earthquakes that occurred in the County of San Bernardino in June and July of 1992, or any other related casualty.

(12) Any loss sustained as a result of the Fountain Fire that occurred in the County of Shasta, or as a result of either of the fires in the Counties of Calaveras and Trinity that occurred in August 1992, or any other related casualty.

(13) Any loss sustained as a result of storm, flooding, or any other related casualty that occurred in the Counties of Alpine, Contra Costa, Fresno, Humboldt, Imperial, Lassen, Los Angeles, Madera, Mendocino, Modoc, Monterey, Napa, Orange, Plumas, Riverside, San Bernardino, San Diego, Santa Barbara, Sierra, Siskiyou, Sonoma, Tehama, Trinity, and Tulare, and the City of Fillmore in January 1993.

(14) Any loss sustained as a result of a fire that occurred in the Counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura, during October or November of 1993, or any other related casualty.

(15) Any loss sustained as a result of the earthquake, aftershocks, or any other related casualty that occurred in the Counties of Los Angeles, Orange, and Ventura on or after January 17, 1994.

(16) Any loss sustained as a result of a fire that occurred in the County of San Luis Obispo during August of 1994, or any other related casualty.

(17) Any loss sustained as a result of the storms or flooding occurring in 1995, or any other related casualty, sustained in any county of this state subject to a disaster declaration with respect to the storms and flooding.

(18) Any loss sustained as a result of the storms or flooding occurring in December 1996 or January 1997, or any related casualty, sustained in any county of this state subject to a disaster declaration with respect to the storms or flooding.

(19) Any loss sustained as a result of the storms or flooding occurring in February 1998, or any related casualty, sustained in any county of this state subject to a disaster declaration with respect to the storms or flooding.

(20) Any loss sustained as a result of a freeze occurring in the winter of 1998–99, or any related casualty, sustained in any county of this state subject to a disaster declaration with respect to the freeze.

(21) Any loss sustained as a result of an earthquake occurring in September 2000, that was included in the Governor’s proclamation of a state of emergency for the County of Napa.

(22) Any loss sustained as a result of the Middle River levee break in San Joaquin County occurring in June 2004.

(23) Any losses sustained as a result of the fires that occurred in the Counties of Los Angeles, Riverside, San Bernardino, San Diego, and Ventura in October and November 2003, or as a result of floods, mudflows, and debris flows, directly related to fires.

(24) Any losses sustained in the Counties of Santa Barbara and San Luis Obispo as a result of the San Simeon earthquake, aftershocks, and any other related casualties.

(25) Any losses sustained as a result of the wildfires that occurred in Shasta County, commencing August 11, 2004, and any other related casualty.

(26) Any loss sustained in the Counties of Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura as a result of the severe rainstorms, related flooding and slides, and any other related casualties, that occurred in December 2004, January 2005, February 2005, March 2005, or June 2005.

(27) Any loss sustained in the Counties of Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Humboldt, Kings, Lake, Lassen, Madera, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Nevada, Placer, Plumas, Sacramento, San Joaquin, San Luis Obispo, San Mateo, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Trinity, Tulare, Tuolumne, Yolo, and Yuba as a result of the severe rainstorms, related flooding and slides, and any other related casualties, that occurred in December 2005, January 2006, March 2006, or April 2006.

(28) Any loss sustained in the County of San Bernardino as a result of the wildfires that occurred in July 2006.

(29) Any loss sustained in the Counties of Riverside and Ventura as a result of wildfires that occurred during the 2006 calendar year.

(30) Any loss sustained in the Counties of El Dorado, Fresno, Imperial, Kern, Kings, Madera, Merced, Monterey, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara, Stanislaus, Tulare, Ventura, and Yuba that were the subject of the Governor’s proclamations of a state of emergency for the severe freezing conditions that occurred in January 2007.

(31) Any loss sustained in the County of El Dorado as a result of wildfires that occurred in June 2007.

(32) Any loss sustained in the Counties of Santa Barbara and Ventura as a result of the Zaca Fire that occurred during the 2007 calendar year.

(33) Any loss sustained in the County of Inyo as a result of wildfires that commenced in July 2007.

(34) Any loss sustained in the Counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura as a result of wildfires that occurred during the 2007 calendar year that were the subject of the Governor’s disaster proclamations of September 15, 2007, and October 21, 2007.

(35) Any loss sustained in the County of Riverside as a result of extremely strong and damaging winds that occurred in October 2007.

(36) Any loss sustained in the Counties of Butte, Kern, Mariposa, Mendocino, Monterey, Plumas, Santa Clara, Santa Cruz, Shasta, and Trinity as a result of wildfires that occurred in May or June 2008 that were the subject of the Governor’s proclamations of a state of emergency.

(37) Any loss sustained in the County of Santa Barbara as a result of wildfires that occurred in July 2008.

(38) Any loss sustained in the County of Inyo as a result of the severe rainstorms, related flooding and landslides, and any other related casualties, that occurred in July 2008.

(39) Any loss sustained in the County of Humboldt as a result of wildfires that commenced in May 2008.

(40) Any loss sustained in the County of Santa Barbara as a result of wildfires that commenced in November 2008.

(41) Any loss sustained in the Counties of Los Angeles and Ventura as a result of wildfires that commenced in October 2008 or November 2008 that were the subject of the Governor’s proclamations of a state of emergency.

(42) Any loss sustained in the Counties of Orange, Riverside, and San Bernardino as a result of wildfires that commenced in November 2008.

(43) Any loss sustained in the County of Santa Barbara as a result of wildfires that commenced in May 2009.

(b) (1) In the case of any loss allowed under Section 165(c) of the Internal Revenue Code, relating to limitation of losses of individuals, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 17276, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the adjusted taxable income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code which exceeds the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss.

(d) The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Losses allowable under this section may not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(f) For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

(g) For losses described in paragraphs (15) to (43), inclusive, of subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Amended by Stats. 2009, Ch. 299, Sec. 2. (AB 1568) Effective January 1, 2010.)

article: 6. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses sustained in the County of Humboldt as a result of the earthquake that occurred in January 2010.

(b) (1) In the case of any loss allowed under Section 165(c) of the Internal Revenue Code, relating to limitation of losses of individuals, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 17276, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the adjusted taxable income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code which exceeds the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss.

(d) The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Losses allowable under this section may not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(f) For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

(g) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Added by Stats. 2010, Ch. 449, Sec. 5. (AB 1690) Effective September 29, 2010.)

article: 6. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses sustained in the County of Imperial as a result of the earthquake that occurred in April 2010.

(b) (1) In the case of any loss allowed under Section 165(c) of the Internal Revenue Code, relating to limitation of losses of individuals, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 17276, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the adjusted taxable income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code which exceeds the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss.

(d) The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Losses allowable under this section may not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(f) For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

(g) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Added by Stats. 2010, Ch. 461, Sec. 6. (AB 2136) Effective September 29, 2010.)

article: 6. Deductions


text:
(a) Section 165(i) of the Internal Revenue Code is modified to additionally provide that an appraisal for the purpose of obtaining a loan of federal funds or a loan guarantee from the federal government as a result of a presidentially declared disaster, as defined by Section 1033(h)(3) of the Internal Revenue Code, may be used to establish the amount of any loss described in Section 165(i)(1) or (2) of the Internal Revenue Code to the extent provided in regulations or other guidance of the Secretary of the Treasury under Section 165(i)(4) of the Internal Revenue Code, as added by Section 912 of Public Law 105-34.

(b) This section shall apply on and after August 5, 1997.

history: (History: Added by Stats. 1998, Ch. 7, Sec. 6. Effective March 14, 1998.)

article: 6. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses resulting from any of the following disasters:

(1) Any loss sustained in the Counties of Los Angeles and Monterey as a result of wildfires that commenced in August 2009.

(2) Any loss sustained in the County of Placer as a result of wildfires that commenced in August 2009.

(3) Any loss sustained in the Counties of Calaveras, Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Francisco, and Siskiyou as a result of winter storms that commenced in January 2010.

(4) Any loss sustained in the County of Kern as a result of the wildfires that commenced in July 2010.

(b) (1) In the case of any loss allowed under Section 165(c) of the Internal Revenue Code, relating to limitation of losses of individuals, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 17276, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the adjusted taxable income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code which exceeds the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss.

(d) The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Losses allowable under this section may not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(f) For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

(g) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Added by Stats. 2010, Ch. 447, Sec. 5. (AB 1662) Effective September 29, 2010.)

article: 6. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses sustained in the County of Mendocino as a result of the tsunami that occurred in March 2011.

(b) (1) In the case of any loss allowed under Section 165(c) of the Internal Revenue Code, relating to limitation of losses of individuals, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 17276, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the adjusted taxable income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code which exceeds the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss.

(d) This section and Section 165(i) of the Internal Revenue Code apply to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Losses allowable under this section shall not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(f) For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

(g) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Amended by Stats. 2015, Ch. 303, Sec. 469. (AB 731) Effective January 1, 2016.)

article: 6. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses sustained in the County of San Mateo as a result of the explosion and fire that occurred in September 2010.

(b) (1) In the case of any loss allowed under Section 165(c) of the Internal Revenue Code, relating to limitation of losses of individuals, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 17276, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the adjusted taxable income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code which exceeds the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss.

(d) This section and Section 165(i) of the Internal Revenue Code apply to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Losses allowable under this section shall not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(f) For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

(g) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Amended by Stats. 2015, Ch. 303, Sec. 470. (AB 731) Effective January 1, 2016.)

article: 6. Deductions


text:
(a) Section 165(i) of the Internal Revenue Code shall be applicable to any losses sustained in the County of Santa Cruz as a result of the severe storms that occurred in March 2011.

(b) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return, determined with regard to extension, for the taxable year in which the disaster occurred.

(c) Unless specifically provided otherwise, any law that suspends, defers, reduces, or otherwise diminishes the deduction of a net operating loss shall not apply to a net operating loss attributable to the loss described in subdivision (a).

history: (History: Added by Stats. 2012, Ch. 203, Sec. 1. (AB 2332) Effective August 27, 2012.)

article: 6. Deductions


text:
(a) Section 165(i) of the Internal Revenue Code shall be applicable to any losses sustained in the Counties of Los Angeles and San Bernardino as a result of the severe winds that occurred in November 2011.

(b) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return, determined with regard to extension, for the taxable year in which the disaster occurred.

(c) Unless specifically provided otherwise, any law that suspends, defers, reduces, or otherwise diminishes the deduction of a net operating loss shall not apply to a net operating loss attributable to the loss described in subdivision (a).

history: (History: Added by Stats. 2012, Ch. 284, Sec. 1. (SB 1544) Effective September 7, 2012.)

article: 6. Deductions


text:
(a) Section 165(i) of the Internal Revenue Code shall be applicable to any losses sustained in the County of San Diego as a result of the wildfires that occurred in May 2014.

(b) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return, determined with regard to extension, for the taxable year in which the disaster occurred.

(c) Unless specifically provided otherwise, any law that suspends, defers, reduces, or otherwise diminishes the deduction of a net operating loss shall not apply to a net operating loss attributable to the loss described in subdivision (a).

history: (History: Added by Stats. 2014, Ch. 352, Sec. 1. (AB 922) Effective September 16, 2014.)

article: 6. Deductions


text:
(a) For taxable years beginning on or after January 1, 2014, and before January 1, 2029, Section 165(i) of the Internal Revenue Code, relating to disaster losses, shall be applicable to any loss sustained as a result of any disaster occurring in any city, county, or city and county in this state that is proclaimed by the Governor to be in a state of emergency.

(b) (1) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code, relating to disaster losses, may be made on a return or amended return filed on or before the due date of the return, determined with regard to any extension of time for filing the return, for the taxable year in which the disaster occurred.

(2) Notwithstanding Section 18572, this subdivision shall apply to any loss described in subdivision (a).

(c) Unless specifically provided otherwise, any law, other than Section 17276, that suspends, defers, reduces, or otherwise diminishes the deduction of a net operating loss shall not apply to a net operating loss attributable to the loss described in subdivision (a).

(d) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section and Section 24347.14, the Legislature finds and declares as follows:

(A) The specific goal, purpose, and objective of the deduction is to support taxpayers whose business or personal property is completely or partially destroyed due to a disaster.

(B) The performance indicator for the Legislature to use in determining if the deduction achieves its stated purpose is the number of taxpayers allowed a deduction pursuant to this section or Section 24347.14.

(2) (A) By May 1, 2025, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section and Section 24347.14.

(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.

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

history: (History: Amended by Stats. 2023, Ch. 285, Sec. 1. (SB 264) Effective September 30, 2023. Repealed as of December 1, 2029, by its own provisions.)

article: 6. Deductions


text:
(a) There shall be allowed as a deduction the amount of interest paid or incurred by a taxpayer during the taxable year on any loan or financed indebtedness obtained from a publicly owned utility company for the purpose of acquiring and installing any energy efficient product or equipment to a qualified residence located in this state.

(b) For purposes of this section:

(1) “Energy efficient product or equipment” means any product or equipment certified by a publicly owned utility company that will improve the energy efficiency, as defined by paragraph (2) of subdivision (a) of Section 399.4 of the Public Utilities Code, of a qualified residence on which the product or equipment is installed or applied.

(2) “Energy efficient product or equipment” shall include, but not be limited to, heating, ventilation, air-conditioning, lighting, solar, advanced metering of energy usage, windows, insulation, zone heating products, and weatherization systems.

(3) “Zone heating products” mean gas room heaters certified by the California Energy Commission or wood fueled stoves certified by the federal Environmental Protection Agency.

(4) “Publicly owned utility company” has the same meaning as set forth in subdivision (d) of Section 9604 of the Public Utilities Code.

(5) “Qualified residence” has the same meaning as set forth in Section 163(h)(4)(A) of the Internal Revenue Code.

(6) “Publicly owned utility company loan or financial indebtedness” means any amount borrowed from a publicly owned utility company to finance the acquisition and installation of energy efficient products and equipment installed or applied to a qualified residence located in this state.

(c) Any interest amount that is allowed as a deduction pursuant to this section (and the application of Section 17072) may not otherwise be allowed as a deduction for purposes of this part.

(d) The publicly owned utility company shall issue a federal income tax Form 1098, or similar form, for the purpose of notifying the taxpayer of his or her eligibility for the deduction allowed by this section.

(e) The deduction allowed by this section shall be in lieu of any credit allowed by this part for interest paid or incurred by the taxpayer in connection with the purchase of energy efficient equipment.

(f) The Legislature finds and declares that many taxpayers may be unaware that they may deduct interest paid or incurred pursuant to this section. The Legislature further finds that it is important to inform taxpayers of this deduction. Therefore, it is the intent of the Legislature to encourage all publicly owned utility companies to inform their customers in writing that they may deduct interest paid or incurred pursuant to this section. It is the further intent of the Legislature to encourage all publicly owned utility companies that are unable to offer customer financing to acquire or install energy efficient products and equipment to inform their customers in writing that interest on a home equity or home improvement loan used to purchase energy efficient products and equipment may also be tax deductible.

(g) It is the intent of the Legislature to inquire with the Internal Revenue Service as to whether the loan program administered by the Sacramento Municipal Utility District qualifies for an interest deduction in compliance with the Internal Revenue Code and the regulations thereunder.

history: (History: Added by Stats. 2001, 2nd Ex. Sess., Ch. 5, Sec. 2. Effective October 1, 2001.)

article: 6. Deductions


text:
(a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2030, Section 280E of the Internal Revenue Code, relating to expenditures in connection with the illegal sale of drugs, shall not apply to the carrying on of any trade or business that is commercial cannabis activity by a licensee.

(b) For purposes of this section, “commercial cannabis activity” and “licensee” shall have the same meanings as set forth in Division 10 (commencing with Section 26000) of the Business and Professions Code.

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

history: (History: Amended by Stats. 2024, Ch. 34, Sec. 19. (SB 167) Effective June 27, 2024. Repealed as of December 1, 2030, by its own provisions.)

article: 6. Deductions


text:
(a) Section 220(a) of the Internal Revenue Code, relating to deduction allowed, is modified to provide that the amount allowed as a deduction shall be an amount equal to the amount allowed to that individual as a deduction under Section 220 of the Internal Revenue Code, relating to medical savings accounts, on the federal income tax return filed for the same taxable year by that individual.

(b) Section 220(f)(4) of the Internal Revenue Code, relating to additional tax on distributions not used for qualified medical expenses, is modified by substituting “12.5 percent” in lieu of “20 percent.”

(c) The amendments made to this section by the act adding this subdivision shall apply to disbursements made during taxable years beginning on or after January 1, 2016.

history: (History: Amended by Stats. 2015, Ch. 359, Sec. 12. (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.)

article: 6. Deductions


text: Section 220(f)(5) of the Internal Revenue Code, relating to rollover contributions, shall not apply.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 26.5. Effective October 7, 2005.)

article: 6. Deductions


text: Section 223 of the Internal Revenue Code, relating to health savings accounts, shall not apply.

history: (History: Added by Stats. 2005, Ch. 691, Sec. 26.6. Effective October 7, 2005.)

article: 6. Deductions


text:
(a) Section 164(a)(3) of the Internal Revenue Code, relating to the deductibility of state, local, and foreign income, war profits, and excess profits taxes, shall not apply.

(b) Section 164(b)(5) of the Internal Revenue Code, relating to general sales taxes, shall not apply.

(c) Section 164(b)(6) of the Internal Revenue Code, relating to the limitation on individual deductions for taxable years 2018 to 2025, shall not apply.

(d) In addition to the provisions of Section 164(c) of the Internal Revenue Code, relating to deduction denied in case of certain taxes, no deduction shall be allowed for any tax imposed under Chapter 10.5 (commencing with Section 17935), Chapter 10.6 (commencing with Section 17941), or Chapter 10.7 (commencing with Section 17948) of this part or under Part 11 (commencing with Section 23001).

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 33. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: No deduction shall be allowed for the tax deducted and withheld under Section 18662 and Section 13020 of the Unemployment Insurance Code either to the employer or to the recipient of the income in computing taxable income under this part.

history: (History: Amended by Stats. 1993, Ch. 31, Sec. 8. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

article: 6. Deductions


text:
Section 163(e) of the Internal Revenue Code is modified as follows:

(a) For taxable years beginning on or after January 1, 1987, and before the taxable year in which the debt obligation matures or is sold, exchanged, or otherwise disposed, the amount deductible under this part is the same as the amount deductible on the federal tax return.

(b) The difference between the amount deductible on the federal tax return and the amount allowable under this part, with respect to obligations issued after December 31, 1984, for taxable years beginning before January 1, 1987, shall be allowed as a deduction in the taxable year in which the debt obligation matures or is sold, exchanged, or otherwise disposed.

(c) The provisions of Section 7202(c) of Public Law 101-239, relating to the effective date for treatment of certain high yield original issue discount obligations, shall apply.

history: (History: Amended by Stats. 1990, Ch. 452, Sec. 9. Effective July 31, 1990. Applicable to taxable years beginning on or after January 1, 1990, by Sec. 56 of Ch. 452.)

article: 6. Deductions


text:
(a) Section 163(h)(3)(E) of the Internal Revenue Code, relating to mortgage insurance premiums treated as interest, shall not apply.

(b) Section 163(h)(3)(F) of the Internal Revenue Code, relating to special rules for taxable years 2018 to 2025, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 34. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: For taxable years beginning on or after January 1, 2014, a deduction shall not be allowed for the amount of any fine or penalty paid or incurred by an owner of all or part of a professional sports franchise, where that fine or penalty is assessed or imposed by the professional sports league that includes that franchise.

history: (History: Added by Stats. 2014, Ch. 792, Sec. 1. (AB 877) Effective September 29, 2014.)

article: 6. Deductions


text: Payments made to the California Housing Finance Agency by the borrower pursuant to Section 52514 of the Health and Safety Code shall be considered payments of interest for purposes of Section 163 of the Internal Revenue Code.

history: (History: Repealed and added by Stats. 1983, Ch. 488, Sec. 29. Effective July 28, 1983.)

article: 6. Deductions


text: The fee imposed by Section 9008 of the Patient Protection and Affordable Care Act (Public Law 111-148), shall be considered a tax described in Section 275(a)(6) of the Internal Revenue Code.

history: (History: Added by Stats. 2015, Ch. 359, Sec. 13. (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.)

article: 6. Deductions


text: Section 213(a) of the Internal Revenue Code, relating to allowance of deduction, is modified by substituting “7.5 percent” for “10 percent” for taxable years beginning before January 1, 2021.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 35. (SB 711) Effective October 1, 2025. Applicable to taxable years beginning on or after January 1, 2015, as provided in Sec. 41 of Stats. 2015, Ch. 359.)

article: 6. Deductions


text:
(a) Section 168 of the Internal Revenue Code is modified as follows:

(1) Any reference to “tax imposed by this chapter” in Section 168 of the Internal Revenue Code means “net tax,” as defined in Section 17039.

(2) (A) Section 168(e)(3) is modified to provide that any grapevine, replaced in a vineyard in California in any taxable year beginning on or after January 1, 1992, as a direct result of a phylloxera infestation in that vineyard, or replaced in a vineyard in California in any taxable year beginning on or after January 1, 1997, as a direct result of Pierce’s disease in that vineyard, shall be “five-year property,” rather than “10-year property.”

(B) Section 168(g)(3) of the Internal Revenue Code is modified to provide that any grapevine, replaced in a vineyard in California in any taxable year beginning on or after January 1, 1992, as a direct result of a phylloxera infestation in that vineyard, or replaced in a vineyard in California in any taxable year beginning on or after January 1, 1997, as a direct result of Pierce’s disease in that vineyard, shall have a class life of 10 years.

(C) Every taxpayer claiming a depreciation deduction with respect to grapevines as described in this paragraph shall obtain a written certification from an independent state-certified integrated pest management adviser, or a state agricultural commissioner or adviser, that specifies that the replanting was necessary to restore a vineyard infested with phylloxera or Pierce’s disease. The taxpayer shall retain the certification for future audit purposes.

(3) Section 168(j) of the Internal Revenue Code, relating to property on Indian reservations, shall not apply.

(4) Section 168(k) of the Internal Revenue Code, relating to special allowance for certain property, shall not apply.

(5) Section 168(e)(3)(E)(vii) of the Internal Revenue Code shall not apply.

(6) Sections 168(b)(3)(G) and 168(e)(6) of the Internal Revenue Code, relating to qualified improvement property, shall not apply.

(7) (A) Sections 168(g)(1)(F) and 168(g)(1)(G) of the Internal Revenue Code shall not apply.

(B) The amendments made by Section 13204(a) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Sections 168(g)(2)(C) and 168(g)(3)(B) of the Internal Revenue Code shall not apply.

(C) Section 168(g)(8) of the Internal Revenue Code, relating to electing real property trade or business, shall not apply.

(8) Section 168(l) of the Internal Revenue Code, relating to qualified second generation biofuel plant property, shall not apply.

(9) Section 168(m) of the Internal Revenue Code, relating to special allowance for certain reuse and recycling property, shall not apply.

(10) Section 168(i)(15)(D) of the Internal Revenue Code, relating to termination, is modified by substituting the phrase “December 31, 2007” for the phrase “December 31, 2025.”

(11) Sections 168(e)(3)(B)(vii) and 168(e)(3)(B)(viii) of the Internal Revenue Code shall not apply.

(b) Section 169 of the Internal Revenue Code, relating to amortization of pollution control facilities, is modified as follows:

(1) The deduction allowed by Section 169 of the Internal Revenue Code shall be allowed only with respect to facilities located in this state.

(2) The “state certifying authority,” as defined in Section 169(d)(2) of the Internal Revenue Code, means the State Air Resources Board, in the case of air pollution, and the State Water Resources Control Board, in the case of water pollution.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 36. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text:
(a) Section 170(b)(1)(A)(ix) of the Internal Revenue Code, relating to percentage limitations, shall not apply.

(b) Section 170(b)(1)(G) of the Internal Revenue Code, relating to increased limitation for cash contributions, shall not apply.

(c) Section 170(b)(1)(E)(vi) of the Internal Revenue Code as it read on January 1, 2015, relating to termination, shall apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 37. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: Section 170(p) of the Internal Revenue Code, relating to special rule for taxpayers who do not elect to itemize deductions, shall not apply.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 38. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text:
(a) Section 167(g) of the Internal Revenue Code, relating to depreciation under income forecast method, shall be modified as follows:

(1) Section 167(g)(2)(C) of the Internal Revenue Code is modified by substituting “Section 19521” for “Section 460(b)(7)” of the Internal Revenue Code.

(2) Section 167(g)(5)(D) of the Internal Revenue Code is modified by substituting “Part 10.2 (commencing with Section 18401) (other than Section 19136)” for “Subtitle F (other than Sections 6654 and 6655).”

(3) Section 167(g)(5)(E) of the Internal Revenue Code, relating to treatment of distribution costs, shall not apply.

(4) Section 167(g)(7) of the Internal Revenue Code, relating to treatment of participations and residuals, shall not apply.

(b) Section 167(h) of the Internal Revenue Code, relating to amortization of geological and geophysical expenditures, shall not apply.

history: (History: Amended by Stats. 2010, Ch. 14, Sec. 20. (SB 401) Effective January 1, 2011.)

article: 6. Deductions


text:
(a) Section 179(b)(1) of the Internal Revenue Code, relating to dollar limitation, shall not apply and in lieu thereof, the aggregate cost which may be taken into account under Section 179(a) of the Internal Revenue Code for any taxable year shall not exceed twenty-five thousand dollars ($25,000).

(b) Section 179(b)(2) of the Internal Revenue Code, relating to reduction in limitation, does not apply and in lieu thereof, the limitation under subdivision (a) for any taxable year shall be reduced, but not to below zero, by the amount by which the cost of Section 179 property, as defined in Section 179(d)(1) of the Internal Revenue Code, except as otherwise provided, placed in service during the taxable year exceeds two hundred thousand dollars ($200,000).

(c) Section 179 of the Internal Revenue Code is modified to provide that the “aggregate amount disallowed” referred to in Section 179(b)(3)(B) of the Internal Revenue Code shall be computed under this part as it read on the date the property generating the amount disallowed was placed in service.

(d) Section 179(c)(2) of the Internal Revenue Code, relating to elections, shall not apply.

(e) Section 179(d)(1)(A)(ii) of the Internal Revenue Code does not apply.

(f) Section 179(e) of the Internal Revenue Code, relating to special rules for qualified disaster assistance property, shall not apply.

(g) The amendments made by Section 124 of the Consolidated Appropriations Act, 2016 (Public Law 114-113) to Section 179 of the Internal Revenue Code, relating to elections to expense certain depreciable business assets, shall not apply.

(h) The amendments made by Section 13101 of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 179 of the Internal Revenue Code, relating to elections to expense certain depreciable business assets, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 39. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: Section 179A of the Internal Revenue Code, relating to deduction for clean-fuel vehicles and certain refueling property, shall not apply.

history: (History: Amended by Stats. 2005, Ch. 691, Sec. 32. Effective October 7, 2005.)

article: 6. Deductions


text: Section 179C of the Internal Revenue Code, relating to election to expense certain refineries, shall not apply.

history: (History: Added by Stats. 2010, Ch. 14, Sec. 22. (SB 401) Effective January 1, 2011.)

article: 6. Deductions


text: Section 179D of the Internal Revenue Code, relating to energy efficient commercial buildings deduction, shall not apply.

history: (History: Added by Stats. 2010, Ch. 14, Sec. 23. (SB 401) Effective January 1, 2011.)

article: 6. Deductions


text: Section 179E of the Internal Revenue Code, relating to election to expense advanced mine safety equipment, shall not apply.

history: (History: Added by Stats. 2010, Ch. 14, Sec. 24. (SB 401) Effective January 1, 2011.)

article: 6. Deductions


text:
(a) No deduction, other than depreciation, shall be allowed for expenditures for tertiary injectants as provided by Section 193 of the Internal Revenue Code.

(b) Section 263(a) of the Internal Revenue Code shall not apply to expenditures for which a deduction is allowed under Section 17266 or 17267.2.

(c) Section 263(c) of the Internal Revenue Code, relating to intangible drilling and development costs in the case of oil and gas wells and geothermal wells, shall not apply to intangible drilling and development costs, in the case of oil and gas wells, paid or incurred on or after January 1, 2024.

history: (History: Amended by Stats. 2024, Ch. 34, Sec. 20. (SB 167) Effective June 27, 2024.)

article: 6. Deductions


text:
Whereas, the people of the State of California desire to promote and achieve tax equity and fairness among all the state’s citizens and further desire to conform to the public policy of nondiscrimination, the Legislature hereby enacts the following for these reasons and for no other purpose:

(a) The provisions of Section 162(a) of the Internal Revenue Code shall not be applicable to expenses incurred by a taxpayer with respect to expenditures made at, or payments made to, a club which restricts membership or the use of its services or facilities on the basis of ancestry or any characteristic listed or defined in Section 11135 of the Government Code, except for genetic information.

(b) A club described in subdivision (a) holding an alcoholic beverage license pursuant to Division 9 (commencing with Section 23000) of the Business and Professions Code, except a club holding an alcoholic beverage license pursuant to Section 23425 thereof, shall provide on each receipt furnished to a taxpayer a printed statement as follows:

“The expenditures covered by this receipt are nondeductible for state income tax purposes or franchise tax purposes.”

(c) For purposes of this section:

(1) “Expenses” means those expenses otherwise deductible under Section 162(a) of the Internal Revenue Code, except for subdivision (a), and includes, but is not limited to, club membership dues and assessments, food and beverage expenses, expenses for services furnished by the club, and reimbursements or salary adjustments to officers or employees for any of the preceding expenses.

(2) “Club” means a club as defined in Division 9 (commencing with Section 23000) of the Business and Professions Code, except a club as defined in Section 23425 thereof.

history: (History: Amended by Stats. 2011, Ch. 261, Sec. 22. (SB 559) Effective January 1, 2012.)

article: 6. Deductions


text:
(a) For purposes of Section 162(a)(2) of the Internal Revenue Code, relating to travel expenses, all of the following shall apply:

(1) The place of residence of a member of the Legislature within the district represented shall be considered the tax home.

(2) The provisions of Section 162(h) of the Internal Revenue Code, relating to state legislators’ travel expenses away from home, shall not be applied.

(b) The provisions of Section 280C(a) of the Internal Revenue Code (relating to rule for employment credits) shall not apply.

(c) The amendments made by Section 13206(d)(2)(A) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97) to Section 280C(c) of the Internal Revenue Code, relating to credit for increasing research activities, shall not apply, except as otherwise provided.

(d) Section 280C(c)(2)(B) of the Internal Revenue Code, as enacted pursuant to Section 13206(d)(2)(A) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), is modified to refer to Section 17041 in lieu of Section 11(b) of the Internal Revenue Code.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 40. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text:
(a) The amendments made to Section 162(m) of the Internal Revenue Code by Section 13601(e)(2) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), relating to exception for binding contracts, shall apply, and is modified by substituting “March 31, 2019” for “November 2, 2017.”

(b) Section 162(m)(3)(C) of the Internal Revenue Code, relating to covered employee, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 41. (SB 711) Effective October 1, 2025.)

article: 6. Deductions


text: For each taxable year beginning on or after January 1, 1999, Section 162(l)(1) of the Internal Revenue Code, relating to applicable percentage, is modified to provide that Section 2002 of the Tax and Trade Relief Extension Act of 1998 (P.L. 105-277), relating to phase in of a 100-percent deduction for health insurance, shall apply.

history: (History: Amended by Stats. 1999, Ch. 146, Sec. 23.5. Effective July 22, 1999.)

article: 6. Deductions


text:
(a) Notwithstanding any other provisions in this part to the contrary, no deduction shall be allowed for interest, taxes, depreciation, or amortization paid or incurred in the taxable year with respect to substandard housing located in this state, except as provided in subdivision (e).

(b) “Substandard housing” means occupied dwellings from which the taxpayer derives rental income or unoccupied or abandoned dwellings for which both of the following apply:

(1) Either of the following occurs:

(A) For occupied dwellings from which the taxpayer derives rental income, a state or local government regulatory agency has determined that the housing violates state law or local codes dealing with health, safety, or building.

(B) For dwellings that are unoccupied or abandoned for at least 90 days, a state or local government regulatory agency has cited the housing for conditions that constitute a serious violation of state law or local codes dealing with health, safety, or building, and that constitute a threat to public health and safety.

(2) Either of the following occurs:

(A) After written notice of violation by the regulatory agency, specifying the applicability of this section, the housing has not been brought to a condition of compliance within six months after the date of the notice or the time prescribed in the notice, whichever period is later.

(B) Good faith efforts for compliance have not been commenced, as determined by the regulatory agency.

“Substandard housing” also means employee housing that has not, within 30 days of the date of the written notice of violation or the date for compliance prescribed in the written notice of violation, been brought into compliance with the conditions stated in the written notice of violation of the Employee Housing Act (Part 1 (commencing with Section 17000) of Division 13 of the Health and Safety Code) issued by the enforcement agency that specifies the application of this section. The regulatory agency may, for good cause shown, extend the compliance date prescribed in a violation notice.

(c) (1) When the period specified in paragraph (2) of subdivision (b) has expired without compliance, the regulatory agency shall mail to the taxpayer a notice of noncompliance. The notice of noncompliance shall be in a form and shall include information prescribed by the Franchise Tax Board, shall be mailed by certified mail to the taxpayer at the taxpayer’s last known address, and shall advise the taxpayer of (A) an intent to notify the Franchise Tax Board of the noncompliance within 10 days unless an appeal is filed, (B) where an appeal may be filed, and (C) a general description of the tax consequences of the filing with the Franchise Tax Board. Appeals shall be made to the same body and in the same manner as appeals from other actions of the regulatory agency. If no appeal is made within 10 days or if after disposition of the appeal the regulatory agency is sustained, the regulatory agency shall notify, in writing, the Franchise Tax Board of the noncompliance.

(2) The notice of noncompliance shall contain the legal description or the lot and block numbers of the real property, the assessor’s parcel number, and the name of the owner of record as shown on the latest equalized assessment roll. In addition, the regulatory agency shall, at the same time as notification of the notice of noncompliance is sent to the Franchise Tax Board, record a copy of the notice of noncompliance in the office of the recorder for the county in which the substandard housing is located that includes a statement of tax consequences that may be determined by the Franchise Tax Board. However, the failure to record a notice with the county recorder does not relieve the liability of any taxpayer nor does it create any liability on the part of the regulatory agency.

(3) The regulatory agency may charge the taxpayer a fee in an amount not to exceed the regulatory agency’s costs incurred in recording any notice of noncompliance or issuing any release of that notice. The notice of compliance shall be recorded and shall serve to expunge the notice of noncompliance. The notice of compliance shall contain the same recording information required for the notice of noncompliance. No deduction by the taxpayer, or any other taxpayer who obtains title to the property subsequent to the recordation of the notice of noncompliance, shall be allowed for the items provided in subdivision (a) from the date of the notice of noncompliance until the date the regulatory agency determines that the substandard housing has been brought to a condition of compliance. The regulatory agency shall mail to the Franchise Tax Board and the taxpayer a notice of compliance, which notice shall be in the form and include the information prescribed by the Franchise Tax Board. In the event the period of noncompliance does not cover an entire taxable year, the deductions shall be denied at the rate of 112 for each full month during the period of noncompliance.

(4) If the property is owned by more than one owner or if the recorded title is in the name of a fictitious owner, the notice requirements provided in subdivision (b) and this subdivision shall be satisfied for each owner if the notices are mailed to one owner or to the fictitious name owner at the address appearing on the latest available property tax bill. However, notices made pursuant to this subdivision do not relieve the regulatory agency from furnishing taxpayer identification information required to implement this section to the Franchise Tax Board.

(d) For the purposes of this section, a notice of noncompliance shall not be mailed by the regulatory agency to the Franchise Tax Board if any of the following occur:

(1) The housing was rendered substandard solely by reason of earthquake, flood, or other natural disaster except where the condition remains for more than three years after the disaster.

(2) The owner of the substandard housing has secured financing to bring the housing into compliance with those laws or codes that have been violated, causing the housing to be classified as substandard, and has commenced repairs or other work necessary to bring the housing into compliance.

(3) The owner of substandard housing that is not within the meaning of housing accommodation as defined by subdivision (d) of Section 35805 of the Health and Safety Code has done both of the following:

(A) Attempted to secure financing to bring the housing into compliance with those laws or codes that have been violated, causing the housing to be classified as substandard.

(B) Been denied that financing solely because the housing is located in a neighborhood or geographical area in which financial institutions do not provide financing for rehabilitation of any of that type of housing.

(e) This section does not apply to deductions from income derived from property rendered substandard solely by reason of a change in applicable state or local housing standards unless the violations cause substantial danger to the occupants of the property, as determined by the regulatory agency which has served notice of violation pursuant to subdivision (b).

(f) The owner of substandard housing found to be in noncompliance shall, upon total or partial divestiture of interest in the property, immediately notify the regulatory agency of the name and address of the person or persons to whom the property has been sold or otherwise transferred and the date of the sale or transference.

(g) By July 1 of each year, the regulatory agency shall report to the appropriate legislative body of its jurisdiction all of the following information, for the preceding calendar year, regarding its activities to secure code enforcement, which shall be public information:

(1) The number of written notices of violation issued for substandard housing under subdivision (b).

(2) The number of violations complied with within the period prescribed in subdivision (b).

(3) The number of notices of noncompliance issued pursuant to subdivision (c).

(4) The number of appeals from those notices pursuant to subdivision (c).

(5) The number of successful appeals by owners.

(6) The number of notices of noncompliance mailed to the Franchise Tax Board pursuant to subdivision (c).

(7) The number of cases in which a notice of noncompliance was not sent pursuant to subdivision (d).

(8) The number of extensions for compliance granted pursuant to subdivision (b) and the mean average length of the extensions.

(9) The mean average length of time from the issuance of a notice of violation to the mailing of a notice of noncompliance to the Franchise Tax Board where the notice is actually sent to the Franchise Tax Board.

(10) The number of cases where compliance is achieved after a notice of noncompliance has been mailed to the Franchise Tax Board.

(11) The number of instances of disallowance of tax deductions by the Franchise Tax Board resulting from referrals made by the regulatory agency. This information may be filed in a supplemental report in succeeding years as it becomes available.

(h) The provisions of this section relating to substandard housing consisting of abandoned or unoccupied dwellings do not apply to any lender engaging in a “federally related transaction,” as defined in Section 11302 of the Business and Professions Code, who acquires title through judicial or nonjudicial foreclosure, or accepts a deed in lieu of foreclosure. The exception provided in this subdivision covers only substandard housing consisting of abandoned or unoccupied dwellings involved in the federally related transaction.

history: (History: Amended by Stats. 1999, Ch. 987, Sec. 31. Effective October 10, 1999.)

article: 6. Deductions


text:
In computing taxable income, no deduction shall be allowed for any of the following:

(a) Abandonment fees paid under Section 51061 or 51093 of the Government Code.

(b) Tax recoupment fees paid under Section 51142 of the Government Code.

history: (History: Added by Stats. 1983, Ch. 488, Sec. 29. Effective July 28, 1983.)

article: 6. Deductions


text: Section 170(e)(3)(C) of the Internal Revenue Code, relating to special rule for contributions of food inventory, shall not apply.

history: (History: Added by Stats. 2010, Ch. 14, Sec. 25. (SB 401) Effective January 1, 2011.)

article: 6. Deductions