Amended in Assembly April 20, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1371

Introduced by Assembly Member Lackey

(Principal coauthor: Assembly Member Olsen)

February 27, 2015

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

LEGISLATIVE COUNSEL’S DIGEST

AB 1371, as amended, Lackey. Personal income taxes: deduction: education expenses.

The Personal Income Tax Law allows various deductions in computing income that is subject to tax under that law.

This bill, for taxable years on or after January 1, 2016, and before January 1, 2021, would allow a deduction from begin insert adjusted end insert gross income, not to exceed $2,500, for the cost of education-related expenses of the taxpayer’s dependent child or children attending public or private school, as specified.

This bill would take effect immediately as a tax levy.

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.  

The Legislature finds and declares all of the
following:

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

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

(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.

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

SEC. 2.  

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

17052.5.  

(a) For each taxable year beginning on or after
January 1, 2016, and before January 1, 2021, 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 begin insert one or more end insert children who
begin delete attend end delete begin insert meet all of the following requirements: end insert

begin insert (A) end insert begin insert   end insert begin insert Attend end insert 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 begin delete year and who meet end delete begin insert year. end insert

begin insert

(B) Are deemed a full-time pupil in accordance with the
compulsory education requirements of Sections 48200 and 48222
of the Education Code, if applicable.

end insert begin insert

(C) Are under 21 years of age at the end of the school year.

end insert

begin insert (D) end insert begin insert   end insert begin insert Meet end insert the requirements of Section 152(c)(1)(D) and (E) of
the Internal Revenue Code.

begin insert

(E) Are claimed as the dependent children on the original, timely
filed return of the qualified taxpayer.

end insert

(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 begin delete pupils; end delete begin insert dependent children; end insert
special education and related services for begin delete pupils end delete begin insert dependent children end insert
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 begin delete a
full-time pupil who is under 21 years of age at the close of the
school year end delete begin insert one or more dependent children end insert who begin delete meets both end delete begin insert meet
all end insert of the following requirements:

(A) Both the begin delete pupil end delete begin insert dependent children end insert 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 250 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)  begin delete Household income end delete begin insert “Household income” end insert means begin insert adjusted end insert
gross income as defined in Section begin delete 61 end delete begin insert 62 end insert 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 begin delete a end delete dependent begin delete child, end delete begin insert children, including
a qualified taxpayer filing a joint return, end insert the sum of all deductions
allowed under this section for begin delete that end delete begin insert those end insert dependent begin delete child end delete begin insert children end insert
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,
2021, and as of that date is repealed.

SEC. 3.  

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

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.

(d) Section 62(a) of the Internal Revenue Code is modified to
provide that the deduction under Section 17052.5 shall be allowed
in determining adjusted gross income.

SEC. 4.  

It is the intent of the Legislature to make the findings
required by Section 41 of the Revenue and Taxation Code.

SEC. 5.  

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