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

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-Introduced.html

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.

LEGISLATIVE COUNSEL'S DIGEST

SB 1, as introduced, Glazer. Personal Income Tax Law: exclusions: student loan forgiveness.

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 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.