Bill Text: CA AB350 | 2019-2020 | Regular Session | Amended

California Assembly Bill 350 (Prior Session Legislation)

Bill Title: Personal income taxes: deduction: 529 college savings plans: contributions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2020-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB350 Detail]

Download: California-2019-AB350-Amended.html

Amended IN Assembly March 19, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 350

Introduced by Assembly Member Choi

February 04, 2019

An act to add and repeal Section 17206.2 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 350, as amended, Choi. Personal income taxes: deduction: 529 college savings plans: contributions.

The Personal Income Tax Law, in modified conformity with federal income tax laws, excludes from the gross income distributions or earnings of a beneficiary of, or a contributor to, a qualified tuition program, as provided, and contributions to a plan are not deductible in computing the income that is subject to the taxes imposed by that law.

This bill, for taxable years beginning on or after January 1, 2019, would allow as a deduction under that law the lesser of (1) the amount contributed by a qualified taxpayer, as defined, to a qualified tuition program, as specified, or (2) $6,000 for spouses filing joint returns, heads of households, and surviving spouses, as defined, or $3,000 for a single individual or a spouse filing separately, as indexed for inflation.

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 17206.2 is added to the Revenue and Taxation Code, to read:

17206.2.

(a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, there shall be allowed as a deduction the lesser of the amount contributed by a qualified taxpayer during the taxable year to a qualified tuition program under Section 529 of the Internal Revenue Code, relating to qualified tuition programs, as modified by Section 17140.3, or the applicable amount determined under subdivision (d).

(b) For purposes of this section, “qualified taxpayer” means an individual who, on behalf of a beneficiary, contributes money to a qualified tuition program and meets all of the other applicable requirements of Section 529 of the Internal Revenue Code, relating to qualified tuition programs, as modified by Section 17140.3.

(c) Section 67(b) of the Internal Revenue Code, relating to miscellaneous itemized deductions, is modified to additionally provide that the deduction allowed under this section is an itemized deduction that is not subject to the 2-percent floor on itemized deductions under Section 67(a) of the Internal Revenue Code, relating to general rule.

(d) (1) The amount allowed as a deduction under subdivision (a) shall not exceed the following amounts:

(A) For spouses filing joint returns, heads of households, and surviving spouses, as defined in Section 17046, six thousand dollars ($6,000).

(B) For a single individual or a spouse filing separately, three thousand dollars ($3,000).

(2) For each taxable year beginning on or after January 1, 2020, the Franchise Tax Board shall recompute the deduction amount prescribed in paragraph (1) in the manner described in subdivision (h) of Section 17041.

(e) This section shall remain in effect only until December 1, 2024, and as of that date is repealed.

SEC. 2.
(a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.
(b) With respect to Section 17206.2 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares as follows:
(1) The goal of this act is to help California to compete and be on par with top 529 plans in the country, while providing financial relief to families who are taking on debt or students taking on student loan debt.
(2) The effectiveness of the deduction allowed by this act shall be measured as follows: the Franchise Tax Board shall report on its internet website the number of taxpayers who claim the deduction allowed by this act. The Legislature shall use this information to determine whether the deduction allowed by this act results in more contributions to a qualified tuition program under Section 529 of the Internal Revenue Code.