Senate Bill No. 187

Introduced by Senator Knight

February 6, 2013

An act to amend Section 17041 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 187, as introduced, Knight. Personal income tax.

The Personal Income Tax Law imposes a net tax at specified rates each taxable year on the entire taxable income of every resident of this state.

This bill would make a technical, nonsubstantive change to that provision.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

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

SECTION 1.  

Section 17041 of the Revenue and Taxation Code
is amended to read:

17041.  

(a) (1) There shall be imposed for each taxable year
upon the entire taxable income of every resident of this state who
is not a part-year resident, except the head of a begin delete household end delete
begin insert household, end insert as defined in Section 17042, taxes in the following
amounts and at the following rates upon the amount of taxable
income computed for the taxable year as if the resident were a
resident of this state for the entire taxable year and for all prior
taxable years for any carryover items, deferred income, suspended
losses, or suspended deductions:

 

If the taxable income is:	The tax is:
Not over $3,650	1% of the taxable income
Over $3,650 but not over $8,650	$36.50 plus 2% of the excess over $3,650
Over $8,650 but not over $13,650	$136.50 plus 4% of the excess over $8,650
Over $13,650 but not over $18,950	$336.50 plus 6% of the excess over $13,650
Over $18,950 but not over $23,950	$654.50 plus 8% of the excess over $18,950
Over $23,950	$1,054.50 plus 9.3% of the excess over $23,950

 

(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.

(b) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident, except
the head of a household as defined in Section 17042, a tax as
calculated in paragraph (2).

(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the “taxable income of a nonresident or part-year
resident,” as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on
the entire taxable income of the nonresident or part-year resident
as if the nonresident or part-year resident were a resident of this
state for the taxable year and as if the nonresident or part-year
resident were a resident of this state for all prior taxable years for
any carryover items, deferred income, suspended losses, or
suspended deductions, divided by the amount of that income.

(c) (1) There shall be imposed for each taxable year upon the
entire taxable income of every resident of this state who is not a
part-year resident for that taxable year, when the resident is the
head of a household, as defined in Section 17042, taxes in the
following amounts and at the following rates upon the amount of
taxable income computed for the taxable year as if the resident
were a resident of the state for the entire taxable year and for all
prior taxable years for carryover items, deferred income, suspended
losses, or suspended deductions:

 

If the taxable income is:	The tax is:
Not over $7,300	1% of the taxable income
Over $7,300 but not over $17,300	$73 plus 2% of the excess over $7,300
Over $17,300 but not over $22,300	$273 plus 4% of the excess over $17,300
Over $22,300 but not over $27,600	$473 plus 6% of the excess over $22,300
Over $27,600 but not over $32,600	$791 plus 8% of the excess over $27,600
Over $32,600	$1,191 plus 9.3% of the excess over $32,600

 

(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.

(d) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident when
the nonresident or part-year resident is the head of a household,
as defined in Section 17042, a tax as calculated in paragraph (2).

(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the “taxable income of a nonresident or part-year
resident,” as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (c) on
the entire taxable income of the nonresident or part-year resident
as if the nonresident or part-year resident were a resident of this
state for the taxable year and as if the nonresident or part-year
resident were a resident of this state for all prior taxable years for
any carryover items, deferred income, suspended losses, or
suspended deductions, divided by the amount of that income.

(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual
having the same amount of taxable income.

(f) The tax imposed by this part is not a surtax.

(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of children taxed as if parent’s income,
shall apply, except as otherwise provided.

(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is
modified, for purposes of this part, by substituting “1 percent” for
“10 percent.”

(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in subdivisions (a) and (c). That computation shall be
made as follows:

(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change
in the California Consumer Price Index for all items from June of
the prior calendar year to June of the current calendar year, no
later than August 1 of the current calendar year.

(2) The Franchise Tax Board shall do both of the following:

(A) Compute an inflation adjustment factor by adding 100
percent to the percentage change figure that is furnished pursuant
to paragraph (1) and dividing the result by 100.

(B) Multiply the preceding taxable year income tax brackets by
the inflation adjustment factor determined in subparagraph (A)
and round off the resulting products to the nearest one dollar ($1).

(i) (1) For purposes of this part, the term “taxable income of a
nonresident or part-year resident” includes each of the following:

(A) For any part of the taxable year during which the taxpayer
was a resident of this state (as defined by Section 17014), all items
of gross income and all deductions, regardless of source.

(B) For any part of the taxable year during which the taxpayer
was not a resident of this state, gross income and deductions
derived from sources within this state, determined in accordance
with Article 9 of Chapter 3 (commencing with Section 17301) and
Chapter 11 (commencing with Section 17951).

(2) For purposes of computing “taxable income of a nonresident
or part-year resident” under paragraph (1), the amount of any net
operating loss sustained in any taxable year during any part of
which the taxpayer was not a resident of this state shall be limited
to the sum of the following:

(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.

(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at taxable
income of a nonresident or part-year resident.

(3) For purposes of computing “taxable income of a nonresident
or part-year resident” under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall
only be includable or allowable to the extent that the carryover
item, deferred income, suspended loss, or suspended deduction
was derived from sources within this state, calculated as if the
nonresident or part-year resident, for the portion of the year he or
she was a nonresident, had been a nonresident for all prior years.