Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1786

Introduced by Assembly Member Olsen

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(Principal coauthor: Assembly Member Perea)

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(Coauthor: Senator Correa)

February 18, 2014

An act begin insert to amend Section 17072 of, and to add and repeal Section 17052.5 of, the Revenue and Taxation Code, end insert relating to taxation begin insert , to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 1786, as amended, Olsen. begin delete Income end delete begin insert Personal income end insert taxes: begin delete credit. end delete begin insert deduction: education expenses. end insert

The Personal Income Tax Law allows various begin delete credits against the taxes imposed by those laws. end delete begin insert deductions in computing income that is subject to tax under that law. end insert

This bill begin insert , for taxable years on or after January 1, 2015, and before January 1, 2020, end insert would begin delete state that it is the intent of the Legislature to enact legislation that would allow a credit against the taxes imposed by the Personal Income Tax Law or end delete begin insert allow end insert a deduction from gross income begin insert , not to exceed $2,500, end insert for the cost of education-related expenses of the taxpayer’s dependent child begin insert or children end insert attending public or private school begin insert , as specified end insert .

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This bill would take effect immediately as a tax levy.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

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begin insert SECTION 1. end insert   

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The Legislature finds and declares all of the
following:

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(a) While ensuring the quality education of all of California’s
school children is a shared responsibility of the general public, it
is foremost the duty of individual parents and teachers.

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(b) Providing tax relief for citizens who shoulder an extra weight
in pursuit of the common good has long been considered sound
public policy.

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(c) Every school year, kindergarten and grades 1 to 12,
inclusive, parents across California pay at their own expense to
obtain vital educational resources and services that are essential
to those children entrusted to their parents’ care.

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(d) State education tax relief can help empower and engage
low- and middle-income families in personally caring for their
own school children’s learning needs, which they know most
intimately.

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begin insert SEC. 2. end insert   

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begin insert Section 17052.5 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 17052.5. end insert   

(a) For each taxable year beginning on or after
January 1, 2015, and before January 1, 2020, there shall be
allowed as a deduction an amount equal to the qualified amount
that was paid or incurred for qualified education-related expenses
for one or more dependent children by a qualified taxpayer during
the taxable year.

(b) For purposes of this section:

(1) “Dependent children” means children who attend
kindergarten or any of grades 1 to 12, inclusive, in California at
a public, charter, or private school that has a current private
school affidavit on file with the State Department of Education in
the taxable year and who meet the requirements of Section
152(c)(1)(D) and (E) of the Internal Revenue Code.

(2) “Qualified amount” means the amount paid or incurred for
qualified education-related expenses, not to exceed the amount
specified in subdivision (c).

(3) (A) “Qualified education-related expenses” means the
kindergarten or any of grades 1 to 12, inclusive, costs of: textbooks
and school supplies, including, but not limited to, pens, paper,
pencils, notebooks, calculators, and rulers; the rental or purchase
of educational equipment required for classes during the regular
schoolday; school uniforms that are not part of a cocurricular
activity; computers, computer hardware, and educational computer
software used to learn academic subjects; fees for college courses
at public institutions or independent nonprofit colleges, or for
summer school courses that satisfy high school graduation
requirements; psychoeducational diagnostic evaluations to assess
the cognitive and academic abilities of pupils; special education
and related services for pupils who have an individualized
education program or its equivalent; out-of-school enrichment
programs, tutoring, and summer programs that are academic in
nature; and public transportation or third-party transportation
expenses for traveling directly to and from school.

(B) “Qualified education-related expenses” shall not include
any expenses for the items described in subparagraph (A) that also
are used in a trade or business.

(4) “Qualified taxpayer” means a parent or legal guardian of
a full-time pupil who is under 21 years of age at the close of the
school year who meets both of the following requirements:

(A) Both the pupil and the parent or guardian reside in
California when the qualified education-related expenses are paid
or incurred.

(B) (i) The household income does not exceed 300 percent of
the federal Income Eligibility Guidelines published by the Food
and Nutrition Service of the United States Department of
Agriculture for use in determining eligibility for reduced price
meals.

(ii) Household income means gross income as defined in Section
61 of the Internal Revenue Code.

(c) The total deduction allowed under this section to a qualified
taxpayer shall not exceed two thousand five hundred dollars
($2,500) in a taxable year. If more than one qualified taxpayer
may be allowed this deduction for a dependent child, the sum of
all deductions allowed under this section for that dependent child
shall not exceed two thousand five hundred dollars ($2,500) in a
taxable year.

(d) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out
the purposes of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

(e) This section shall remain in effect only until December 1,
2020, and as of that date is repealed.

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begin insert SEC. 3. end insert   

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begin insert Section 17072 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

17072.  

(a) Section 62 of the Internal Revenue Code, relating
to adjusted gross income defined, shall apply, except as otherwise
provided.

(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating
to certain expenses of elementary and secondary school teachers,
shall not apply.

(c) Section 62(a)(21) of the Internal Revenue Code, relating to
attorneys fees relating to awards to whistleblowers, shall not apply.

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(d) For taxable years beginning on or after January 1, 2015,
and before January 1, 2020, the deduction allowed by Section
17052.5, relating to qualified education-related expenses, shall
apply.

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begin insert SEC. 4. end insert   

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This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

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SECTION 1.  

It is the intent of the Legislature to enact
legislation to allow a credit against the taxes imposed by the
Personal Income Tax Law or a deduction from gross income for
the cost of education-related expenses of the taxpayer’s dependent
child attending public or private school by allowing a
nonrefundable credit in the amount of $500 to families with income
of 200 percent or less of the federal Reduced Price Lunch Program
guidelines, and allowing a deduction from gross income in the
amount of $2,500 to families with income of more than 200 percent
and 300 percent or less of the federal Reduced Price Lunch
Program guidelines.

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