Bill Text: CA SB1 | 2023-2024 | Regular Session | Amended

California Senate Bill 1

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Personal Income Tax Law: exclusion: student loan debt.

Spectrum: Strong Partisan Bill (Democrat 13-1)

Status: (Failed) 2024-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB1 Detail]

Download: California-2023-SB1-Amended.html

Amended IN Senate March 30, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1

Introduced by Senators Glazer, Limón, Newman, Rubio, and Wilk
(Coauthors: Senators Allen, Cortese, Dodd, Laird, Min, Roth, Stern, and Umberg)
(Coauthor: Assembly Member Cervantes)

December 05, 2022

~~An act to add and repeal Section 17132.12 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.~~ An act to amend Section 17144.8 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL'S DIGEST

SB 1, as amended, Glazer. Personal Income Tax Law: ~~exclusions: student loan forgiveness.~~ exclusion: student loan debt.

The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, including an exclusion for the amount of student loan indebtedness repaid or canceled pursuant to a specified federal law.
This bill would exclude from an individual’s gross income, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, the amount of certain student loans discharged, in whole or in part, after December 31, 2020, and before January 1, 2026, in conformity with federal law.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would state the intent of the Legislature to comply with those provisions.
This bill would make findings and declarations related to a gift of public funds.
The Personal Income Tax Law, in modified conformity with federal law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income for purposes of computing tax liability.
This bill would, for taxable years beginning on or after January 1, 2022, and before January 1, 2026, exclude from gross income any student loan amount waived, canceled, or otherwise forgiven by the United States Department of Education pursuant to a specified federal student debt relief plan.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
~~This bill would include additional information required for any bill authorizing a new tax expenditure.~~
~~This bill would take effect immediately as a tax levy.~~

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

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

SECTION 1.

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

17144.8.

(a) Section 108(f)(5) of the Internal Revenue Code, relating to discharges on account of death or disability, as added by Section 11031(a) of the federal Tax Cuts and Jobs Act (Public Law 115-97), shall apply except as otherwise provided.

(b) Section 108(f)(5)(A) of the Internal Revenue Code, as added by Section 11031(a) of the federal Tax Cuts and Jobs Act (Public Law 115-97), is modified by substituting the phrase “after December 31, 2018,” in lieu of the phrase “after December 31, 2017, and before January 1, 2026.”

(c) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, the amendments made by Section 9675(a) of the American Rescue Plan Act of 2021 (Public Law 117-2) to Section 108(f)(5) of the Internal Revenue Code relating to the special rule for discharges in 2021 through 2025 shall apply.

SEC. 2.
It is the intent of the Legislature to comply with Section 41.

SEC. 3.
The Legislature hereby finds and declares that the exclusion authorized by Section 17144.8 of the Revenue and Taxation Code, as amended by this act, serves the public purpose of conforming with federal tax law for state tax purposes in order to lessen the tax burden on individuals who have their student loans discharged and does not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.

SECTION 1.Section 17132.12 is added to the Revenue and Taxation Code, to read:
17132.12.
(a)For taxable years beginning on or after January 1, 2022, and before January 1, 2026, gross income shall not include any student loan amount waived, canceled, or otherwise forgiven by the United States Department of Education pursuant to the one-time student debt relief plan announced by the President of the United States on August 24, 2022.
~~(b)(1)For purposes of complying with Section 41, the Legislature finds and declares the following:~~
(A)The purpose of the tax expense allowed by this section is to prevent unnecessary financial harm arising from the forgiveness of student loans for individuals impacted by military operations or national emergencies.
(B)The performance indicators used to determine whether the exclusion from income is achieving its stated purpose shall be the number of taxpayers receiving debt forgiveness that, but for this section, would have been included in income.
(2)(A)No later than July 1, 2027, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, that details the number of taxpayers that received student loan debt forgiveness that, but for this section, would have been included in income, and the total dollar amount of debt forgiveness excluded.
~~(B)The disclosure provisions of this paragraph shall be considered an exception to Section 19542.~~
~~(c)This section shall remain operative only until December 1, 2027, and as of that date is repealed.~~
SEC. 2.
~~This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.~~