California AB 232: Administration of estates and trusts.

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

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 |Add To My Favorites |Track Bill | Version: 04/11/25 - Amended Assembly
 01/13/25 - Introduced

 AB-232 Natural disasters: catastrophe savings accounts: personal income tax.(2025-2026)

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 Date Published: 04/11/2025 09:00 PM

AB232:v98#DOCUMENTBill Start

 Amended
 IN 
 Assembly
 April 11, 2025

 CALIFORNIA LEGISLATURE—
 2025–2026 REGULAR SESSION

 Assembly Bill

No. 232

Introduced by Assembly Members Calderon and Gipson
(Coauthor: Assembly Member Valencia)

January 13, 2025

 An act to add Division 21 (commencing with Section 60000) to the Financial Code, and to amend Section 17072 of, and to add Sections 17141.8 and 17207.15 to, the Revenue and Taxation Code, relating to natural disasters, to take effect immediately, tax levy. 

LEGISLATIVE COUNSEL'S DIGEST

AB 232, as amended, Calderon.
 Natural disasters: catastrophe savings accounts: personal income tax.

Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Protection and Innovation.

This bill, until January 1, 2030, would authorize a homeowner to establish one catastrophe savings account that, among other things, has the specified purpose of covering the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake. The bill would require distributions from a catastrophe savings account to be used to cover qualified catastrophe expenses, defined as expenses paid or incurred due to damage to or loss of a homeowner’s primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency. The bill would impose penalties on homeowners who use a distribution to
 cover an expense other than a qualified catastrophe expense, unless specified exceptions apply. The bill would require the penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.

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

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

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

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

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

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

This bill
 would take effect immediately as a tax levy.

Digest Key

 Vote:
 MAJORITY 
 Appropriation:
 NO 
 Fiscal Committee:
 YES 
 Local Program:
 NO 

Bill Text

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

SECTION 1.Division 21 (commencing with Section 60000) is added to the Financial Code, to read:

21.Catastrophe Savings Accounts

60000.For purposes of this division, the following definitions apply:

(a)“Catastrophe Sa