Bill Text: CA AB1860 | 2023-2024 | Regular Session | Introduced
Bill Title: Personal Income Tax Law: exclusions: student loan debt.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-05-16 - In committee: Held under submission. [AB1860 Detail]
Download: California-2023-AB1860-Introduced.html
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 1860
| Introduced by Assembly Member Bauer-Kahan |
January 18, 2024 |
An act to add and repeal Section 17144.9 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1860, as introduced, Bauer-Kahan.
Personal Income Tax Law: exclusions: 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, for taxable years beginning on or after January 1, 2024, and before January 1, 2029, would exclude qualified discharge of indebtedness income from gross income. The bill would define “qualified discharge of indebtedness income” for this purpose to mean income that would otherwise be realized from the discharge of student loan debt, as defined, or medical debt that is discharged by a qualifying nonprofit organization.
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.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 17144.9 is added to the Revenue and Taxation Code, to read:17144.9.
(a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income does not include qualified discharge of indebtedness income.(b) For purposes of this section, the following definitions shall apply:
(1) (A) “Qualified discharge of indebtedness income” means income that arises from the discharge of a debt if the debt discharged satisfies both of the following conditions:
(i) The source of the debt was either a student loan or medical debt.
(ii) The debt was discharged or otherwise terminated by a
qualifying entity.
(B) Notwithstanding subparagraph (A), “qualified discharge of indebtedness income” shall not include income resulting from the discharge of a debt if the discharge is in exchange for services provided to the qualifying entity.
(2) “Qualifying entity” means an entity that is exempt from federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code.
(3) “Student loan” shall have the same meaning as that term is defined in subdivision (q) of Section 1788.100 of the Civil Code.
(c) (1) For purposes of complying with Section 41, the Legislature finds as follows:
(A) The specific goal, purpose, and objective of the exclusion provided
by this section is to provide relief to individuals that would otherwise be penalized for the gratuity of nonprofit organizations.
(B) The performance indicators for the Legislature to use in determining if the exclusion has achieved this goal shall be the number of taxpayers excluding discharged indebtedness from income based on this section, and the total dollar value of income so excluded.
(2) The Legislative Analyst’s Office shall, no later than December 1, 2029, submit a report to the Legislature, in accordance with Section 9795 of the Government Code, that estimates the number of taxpayers with discharged indebtedness excluded from income, and estimates the total dollar value of the qualified discharge of indebtedness income received, to the extent data is available.
(d) This section shall remain operative
until December 1, 2029, and as of that date is repealed.
