Senate Bill No. 1103

Introduced by Senator Cannella

February 17, 2016

An act to amend Section 17053.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1103, as introduced, Cannella. Taxation: renters’ credit.

The Personal Income Tax Law authorizes various credits against the taxes imposed by that law, including a credit for qualified renters in the amount of $120 for married couples filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000, as adjusted currently to $76,518, or less, and in the amount of $60 for other individuals if adjusted gross income is $25,000, as adjusted currently to $38,259, or less.

This bill would, for taxable years beginning on and after January 1, 2017, increase this credit for a qualified renter to $184 for married couples filing joint returns, heads of household, and surviving spouses, if adjusted gross income is $100,000 or less and to an amount equal to $92 for other individuals whose adjusted gross income is $50,000 or less. The bill would require the Franchise Tax Board to annually adjust the adjusted gross income amounts for inflation, beginning January 1, 2018.

This bill would take effect immediately as a tax levy.

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

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

SECTION 1.  

Section 17053.5 of the Revenue and Taxation
Code is amended to read:

17053.5.  

(a) (1) For a qualified renter, there shall be allowed
a credit against his or her “net tax,” as defined in Section 17039.
The amount of the credit shall be as follows:

(A) For begin delete married end delete begin insert taxable years beginning before January 1,
2017: end insert

begin insert (i) end insert begin insert   end insert begin insert For married end insert couples filing joint returns, heads of household,
and surviving spouses, as defined in Section 17046, the credit shall
be equal to one hundred twenty dollars ($120) if adjusted gross
income is fifty thousand dollars ($50,000) or less.

begin delete

(B)

end delete

begin insert (ii) end insert begin insert   end insert begin insert For end insert other individuals, begin delete tax end delete the credit shall be equal to sixty
dollars ($60) if adjusted gross income is twenty-five thousand
dollars ($25,000) or less.

begin delete

(B)

end delete begin insert

(B) For taxable years beginning on or after January 1, 2017:

end insert begin insert

(i) For married couples filing joint returns, heads of household,
and surviving spouses, as defined in Section 17046, the credit shall
be equal to one hundred eighty-four dollars ($184) if adjusted
gross income is one hundred thousand dollars ($100,000) or less.

end insert begin insert

(ii) For other individuals, the credit shall be equal to ninety-two
dollars ($92) if adjusted gross income is fifty thousand dollars
($50,000) or less.

end insert

(2) Except as provided in subdivision (b), a husband and wife
shall receive begin delete but end delete one credit under this section. If the husband and
wife file separate returns, the credit may be taken by either or
equally divided between them, except as follows:

(A) If one spouse was a resident for the entire taxable year and
the other spouse was a nonresident for part or all of the taxable
year, the resident spouse shall be allowed one-half the credit
allowed to married persons and the nonresident spouse shall be
permitted one-half the credit allowed to married persons, prorated
as provided in subdivision (e).

(B) If both spouses were nonresidents for part of the taxable
year, the credit allowed to married persons shall be divided equally
between them subject to the proration provided in subdivision (e).

(b) For a husband and wife, if each spouse maintained a separate
place of residence and resided in this state during the entire taxable
year, each spouse will be allowed one-half the full credit allowed
to married persons provided in subdivision (a).

(c) For purposes of this section, a “qualified renter” means an
individual who satisfies both of the following:

(1) Was a resident of this state, as defined in Section 17014.

(2) Rented and occupied premises in this state which constituted
his or her principal place of residence during at least 50 percent
of the taxable year.

(d) “Qualified renter” does not include any of the following:

(1) An individual who for more than 50 percent of the taxable
year rented and occupied premises that were exempt from property
taxes, except that an individual, otherwise qualified, is deemed a
qualified renter if he or she or his or her landlord pays possessory
interest taxes, or the owner of those premises makes payments in
lieu of property taxes that are substantially equivalent to property
taxes paid on properties of comparable market value.

(2) An individual whose principal place of residence for more
than 50 percent of the taxable year is with begin delete another end delete begin insert any other end insert person
who claimed that individual as a dependent for income tax
purposes.

(3) An individual who has been granted or whose spouse has
been granted the homeowners’ property tax exemption during the
taxable year. This paragraph does not apply to an individual whose
spouse has been granted the homeowners’ property tax exemption
if each spouse maintained a separate residence for the entire taxable
year.

(e) An otherwise qualified renter who is a nonresident for any
portion of the taxable year shall claim the credits set forth in
subdivision (a) at the rate of one-twelfth of those credits for each
full month that individual resided within this state during the
taxable year.

(f) A person claiming the credit provided in this section shall,
as part of that claim, and under penalty of perjury, furnish that
information as the Franchise Tax Board prescribes on a form
supplied by the board.

(g) The credit provided in this section shall be claimed on returns
in the form as the Franchise Tax Board may from time to time
prescribe.

(h) For purposes of this section, “premises” means a house or
a dwelling unit used to provide living accommodations in a
building or structure and the land incidental thereto, but does not
include land only, unless the dwelling unit is a mobilehome. The
credit is not allowed for any taxable year for the rental of land
upon which a mobilehome is located if the mobilehome has been
granted a homeowners’ exemption under Section 218 in that year.

(i) This section shall become operative on January 1, 1998, and
applies to any taxable year beginning on or after January 1, 1998.

(j) For each taxable year beginning on or after January 1, 1999,
begin insert and before January 1, 2017, and for each taxable year beginning
on or after January 1, 2018, end insert the Franchise Tax Board shall
recompute the adjusted gross income amounts set forth in
begin insert subparagraphs (A) and (B), respectively, of paragraph (1) of end insert
subdivision (a). The computation shall be made as follows:

(1) The 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 year, no later than August
1 of the current calendar year.

(2) The Franchise Tax Board shall compute an inflation
adjustment factor by adding 100 percent to begin delete the end delete begin insert that end insert portion of the
percentage change figure begin delete which is end delete furnished pursuant to paragraph
(1) and dividing the result by 100.

(3) The Franchise Tax Board shall multiply the begin delete amount in
subparagraph (B) of end delete begin insert amounts in end insert paragraph (1) of subdivision begin delete (d) end delete
begin insert (a) end insert for the preceding taxable year by the inflation adjustment factor
determined in paragraph (2), and round off the resulting products
to the nearest one dollar ($1).

(4)  begin insert (A) end insert begin insert   end insert In computing the amounts pursuant to this subdivision,
the amounts provided in begin insert clause (i) of end insert subparagraph (A) of
paragraph (1) of subdivision (a) shall be twice the amount provided
in begin insert clause (ii) of end insert subparagraph begin delete (B) end delete begin insert (A) end insert of paragraph (1) of
subdivision (a).

begin insert

(B) In computing the amounts pursuant to this subdivision, the
amounts provided in clause (i) of subparagraph (B) of paragraph
(1) of subdivision (a) shall be twice the amount provided in clause
(ii) of subparagraph (B) of paragraph (1) of subdivision (a).

end insert

SEC. 2.  

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