Bill Text: CA SB230 | 2023-2024 | Regular Session | Amended
Bill Title: Income tax: health savings accounts.
Spectrum: Moderate Partisan Bill (Republican 9-1)
Status: (Engrossed) 2024-01-29 - In Assembly. Read first time. Held at Desk. [SB230 Detail]
Download: California-2023-SB230-Amended.html
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Amended
IN
Senate
January 11, 2024 |
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Amended
IN
Senate
March 15, 2023 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Senate Bill
No. 230
| Introduced by Senator Seyarto (Coauthors: Senators Alvarado-Gil, Dahle, Grove, Jones, Nguyen, and Ochoa Bogh) (Coauthors: Assembly Members Chen, Flora, and Mathis) |
January 23, 2023 |
An act to amend Sections 17131.4, 17131.5, 17215.1, and 17215.4 of, and to add and repeal Section 17217 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 230, as amended, Seyarto.
Income tax: health savings accounts.
The Personal Income Tax Law authorizes various deductions in computing income that is subject to tax under that law.
This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would allow a deduction in computing adjusted gross income in connection with health savings accounts in modified conformity with federal law. In general, the deduction would be an amount equal to the aggregate amount paid in cash during the taxable year by, or on behalf of, an eligible individual, as defined, to a health savings account of that individual, as provided. The bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would also provide related conformity to that federal law with respect to the allowance of rollovers from Archer Medical Savings Accounts, health
flexible spending arrangements, or health reimbursement accounts to a health savings account, and penalties in connection therewith.
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 17131.4 of the Revenue and Taxation Code is amended to read:17131.4.
(a) Section 106(d) of the Internal Revenue Code, relating to contributions to health savings accounts, shall not apply.(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2023, and to taxable years beginning on or after January 1, 2028.
SEC. 2.
Section 17131.5 of the Revenue and Taxation Code is amended to read:17131.5.
(a) Section 125(d)(2)(D) of the Internal Revenue Code, relating to the exception for health savings accounts, shall not apply.(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2023, and to taxable years beginning on or after January 1, 2028.
SEC. 3.
Section 17215.1 of the Revenue and Taxation Code is amended to read:17215.1.
(a) Section 220(f)(5) of the Internal Revenue Code, relating to rollover contributions, shall not apply.(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2023, and to taxable years beginning on or after January 1, 2028.
SEC. 4.
Section 17215.4 of the Revenue and Taxation Code is amended to read:17215.4.
(a) Section 223 of the Internal Revenue Code, relating to health savings accounts, shall not apply.(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2023, and to taxable years beginning on or after January 1, 2028.
SEC. 5.
Section 17217 is added to the Revenue and Taxation Code, to read:17217.
(a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, all of the following shall apply:(1) Section 223 of the Internal Revenue Code, relating to health savings accounts, shall apply, except as otherwise provided.
(2) (A) Section 223(c)(1)(A) of the Internal Revenue Code, relating to eligible individuals, shall be modified to provide, in addition to the existing requirements, that to be an eligible individual, a taxpayer must have adjusted gross income as follows:
(i) For spouses filing joint returns, heads of household, and surviving spouses, as defined in Section 17046, less than eighty-seven thousand dollars ($87,000).
(ii) For other individuals, less than forty-two thousand dollars ($42,000).
(B) For taxable years beginning on or after January 1, 2024, the adjusted gross income amounts in clauses (i) and (ii) of subparagraph (A) shall be recomputed annually in the same manner as the recomputation of income tax brackets under subdivision (h) of Section 17041.
(3) Section 223(e)(1) of the Internal Revenue
Code, relating to tax treatment of accounts, shall be modified by substituting the phrase “Section 17651” 17651 or 23731” for the phrase “Section 511 (relating to imposition on tax of unrelated business income of charitable, etc. organizations)” contained therein.
(4) Section 223(f)(2) of the Internal Revenue Code, relating to inclusion of amounts not used for qualified medical expenses, shall be modified by adding at the end of that paragraph the phrase “this paragraph shall not apply to the extent that a distribution relates to funds contributed by or on
behalf of the beneficiary where the taxpayer making that contribution was not eligible for a deduction at the time the contribution was made, but would have been eligible for a deduction if that contribution were made during a taxable year beginning on or after January 1, 2023, and before January 1, 2028.”
(5) Section 223(f)(4)(A) of the Internal Revenue Code, relating to additional tax on distributions not used for qualified medical expenses, shall not apply.
(6) Section 223(h) of the Internal Revenue Code, relating to reports, shall not apply, and shall be substituted by the phrase, “any person who provides an individual with a high deductible health plan shall make a report to the Franchise Tax Board and to the beneficiary with respect to that plan in the form and manner required
by the Franchise Tax Board.”
(b) (1) For purposes of complying with Section 41 as it relates to this section, and the amendments made to Sections 17131.4, 17131.5, 17215.1, and 17215.4 by the act adding this section, herein referred to as “the deductions,” the Legislature finds and declares the following:
(A) The specific goals, purposes, and objectives that the deductions will achieve are:
(i) To provide a tax incentive to motivate California families to open and contribute to a health savings account for the purpose of saving for future health expenses, thereby encouraging more Californians to pursue a means of preparing for future health-related expenses.
(ii) To reduce the amount of debt related to health care on a dollar-for-dollar basis, thereby increasing a person’s ability to purchase other products that help stimulate economic activity.
(iii) To bring California into conformity with federal tax law regarding the treatment of health savings accounts.
(B) Detailed performance indicators for the Legislature to use in determining whether the deductions meet the goals, purposes, and objectives listed in subparagraph (A) are:
(i) The number of deductions allowed by the Franchise Tax Board pursuant to this act with respect to each taxable year for which this act is operative.
(ii) The total dollar amount of the
deductions described in clause (i).
(2) (A) The Franchise Tax Board shall report the information described in subparagraph (B) of paragraph (1) to the Legislature, in compliance with Section 9795 of the Government Code, in every odd-numbered year during which the provisions of the act adding this section are operative.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(c) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.
