Amended in Senate April 25, 2016

Senate BillNo. 1148


Introduced by Senator Stone

February 18, 2016


An act tobegin delete amend Section 17072 of, and to add Section 17206.2 to,end deletebegin insert repeal and add Section 17204.7 ofend insert the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1148, as amended, Stone. Personal income taxes: deductions:begin delete education expenses.end deletebegin insert qualified tuition.end insert

The Personal Income Tax Law,begin delete in modified conformity with federal income tax laws, allows various deductions from gross income in computing adjusted gross income under that law, including deductions for payments to individual retirement accounts, alimony payments, and interest on educational loans. end deletebegin insert does not conform to a provision of federal income tax law that for taxable years beginning before January 1, 2015, allows a deduction from gross income for the taxable year in an amount equal to qualifying tuition and related expenses paid by the taxpayer during the taxable year, not to exceed $4,000, for enrollment or attendance by the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent at any accredited postsecondary institution. That law provides for a phaseout at certain modified adjusted gross income levels. end insert

This bill, for taxable years beginning on or after January 1, 2016,begin delete would allow a deduction in computing adjusted gross income for those amounts paid or incurred by a qualified taxpayer, as defined, during the taxable year for qualified education expenses, as provided.end deletebegin insert and before January 1, 2021, would conform to that federal law with modifications, including modifications to the amount of the deduction and the phaseout.end insert

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:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 17204.7 of the end insertbegin insertRevenue and Taxation
2Code
end insert
begin insert is repealed.end insert

begin delete
3

17204.7.  

Section 222 of the Internal Revenue Code, relating
4to qualified tuition and related expenses, shall not apply.

end delete
5begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 17204.7 is added to the end insertbegin insertRevenue and Taxation
6Code
end insert
begin insert, to read:end insert

begin insert
7

begin insert17204.7.end insert  

(a) For taxable years beginning on or after January
81, 2016, and before January 1, 2021, Section 222 of the Internal
9Revenue Code, relating to qualified tuition and related expenses,
10is modified as follows:

11
(1) The term “Secretary” shall be replaced by the term
12“Franchise Tax Board.”

13
(2) The applicable dollar limit shall be determined as follows:

14
(A) In the case of a taxpayer whose adjusted gross income for
15the taxable year does not exceed one hundred twenty-five thousand
16dollars ($125,000) or two hundred fifty thousand dollars
17($250,000) in the case of a joint return, ten thousand dollars
18($10,000) per individual.

19
(B) In the case of any other taxpayer, zero.

20
(C) For taxable years beginning on or after January 1, 2017,
21the amounts specified in subparagraph (A) shall be recomputed
22annually in the same manner as the recomputation of income tax
23brackets under subdivision (h) of Section 17041.

24
(3) Section 222(e) of the Internal Revenue Code, relating to
25termination, shall not apply.

26
(b) This section shall remain in effect only until December 1,
272021, and as of that date is repealed.

end insert
28begin insert

begin insertSEC. 3.end insert  

end insert
begin insert

This act provides for a tax levy within the meaning of
29Article IV of the California Constitution and shall go into
30immediate effect.

end insert
begin delete
31

SECTION 1.  

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

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17072.  

(a) Section 62 of the Internal Revenue Code, relating
2to adjusted gross income defined, shall apply, except as otherwise
3provided.

4(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating
5to certain expenses of elementary and secondary school teachers,
6shall not apply.

7(c) Section 62(a)(21) of the Internal Revenue Code, relating to
8attorneys fees relating to awards to whistleblowers, shall not apply.

9(d) Section 62(a) of the Internal Revenue Code is modified to
10provide that the deduction under Section 17206.2 shall be allowed
11in determining adjusted gross income.

12

SEC. 2.  

Section 17206.2 is added to the Revenue and Taxation
13Code
, to read:

14

17206.2.  

(a) For taxable years beginning on or after January
151, 2016, there shall be allowed as a deduction the amount paid or
16incurred by a qualified taxpayer during the taxable year for
17qualified education expenses at a public four-year university or
18community college.

19(b) For the purposes of this section, both of the following apply:

20(1) “Qualified education expenses” means both of the following:

21(A) Costs of attendance that include, but are not limited to,
22payments for books, supplies, equipment, tuition, and fees, and
23similar payments.

24(B) Payments of principal of a qualified education loan, as
25defined in Section 221 of the Internal Revenue Code, relating to
26interest on education loans.

27(2) “Qualified taxpayer” means an individual who pays or incurs
28qualified education expenses during the taxable year for any natural
29person including, but not limited to, the taxpayer, the taxpayer’s
30spouse, or any dependent of the taxpayer and who has a federal
31adjusted gross income of two hundred fifty thousand dollars
32($250,000) or less during the taxable year in which those expenses
33are paid or incurred.

34(c) For each taxable year beginning on or after January 1, 2017,
35the Franchise Tax Board shall recompute the federal adjusted gross
36income limitation described in paragraph (2) of subdivision (b).
37That computation shall be made in the same manner as described
38in subdivision (h) of Section 17041.

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SEC. 3.  

This act provides for a tax levy within the meaning of
2Article IV of the Constitution and shall go into immediate effect.

end delete


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