BILL NUMBER: SB 1437 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Moorlach
(Coauthor: Senator Huff)
(Coauthors: Assembly Members Baker and Lackey)
FEBRUARY 19, 2016
An act to amend Section 17072 of, and to add and repeal Sections
17208 and 17208.2 of, the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1437, as introduced, Moorlach. Personal income taxes:
deductions: education expenses: education savings accounts.
The Personal Income Tax Law, 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.
This bill, for taxable years beginning on or after January 1,
2016, and before January 1, 2021, would allow a deduction in
computing adjusted gross income for those amounts contributed to a
Coverdell education savings account, up to $750 per taxable year, as
provided. The bill, for taxable years beginning on or after January
1, 2016, and before January 1, 2021, would also allow a deduction in
computing adjusted 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: yes.
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 that quality education for all of California's
schoolchildren is a shared responsibility of the general public, it
is foremost the duty of individual parents.
(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) Financial pressures weighing upon California families have
also made it difficult to ensure for their children a quality
elementary and secondary education while at the same time generating
funds for college.
(e) State education tax relief can help empower and engage low-
and middle-income families in personally caring for their own
schoolchildren's kindergarten through high school learning needs and
generate funds for college.
SEC. 2. 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 17208 shall be allowed in
determining adjusted gross income.
(e) Section 62(a) of the Internal Revenue Code is modified to
provide that the deduction under Section 17208.2 shall be allowed in
determining adjusted gross income.
SEC. 3. Section 17208 is added to the Revenue and Taxation Code,
to read:
17208. (a) Notwithstanding any other provision of this part or
Part 11 (commencing with Section 23001) to the contrary, for each
taxable year beginning on or after January 1, 2016, and before
January 1, 2021, a deduction shall be allowed for an amount
contributed by a taxpayer during the taxable year to a Coverdell
education savings account, not to exceed seven hundred fifty dollars
($750) per taxable year, except as otherwise provided in this
section.
(b) For purposes of this section, "Coverdell education savings
account" shall have the same meaning as that term is defined by
Section 530 of the Internal Revenue Code, as modified by Section
23712.
(c) For purposes of applying Section 530 of the Internal Revenue
Code, relating to Coverdell education savings accounts, the basis of
the Coverdell education savings account shall be reduced by any
amount deducted pursuant to this section.
(d) This section shall be repealed on December 1, 2021.
SEC. 4. Section 17208.2 is added to the Revenue and Taxation Code,
to read:
17208.2. (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 the purposes of this section, the following definitions
shall apply:
(1) "Dependent children" means one or more children, as defined in
Section 152(f)(1) of the Internal Revenue Code, relating to child
defined, who meet all of the following requirements:
(A) 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.
(B) Are deemed a full-time pupil in accordance with the compulsory
education requirements of Sections 48200 or 48222 of the Education
Code.
(C) Are under 21 years of age at the end of the school year.
(D) Meet the requirements of Section 152(c)(1)(D) and (E) of the
Internal Revenue Code.
(E) Are claimed as the dependent children on the original, timely
filed return of the qualified taxpayer.
(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 any of the
following: the rental or purchase of educational equipment required
for classes during the regular school day; 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 dependent children; special education and related services for
dependent children 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 one
or more dependent children who meet all of the following
requirements:
(A) Both the dependent children 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) "Household income" means adjusted gross income as defined in
Section 62 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 dependent children, including a qualified
taxpayer filing a joint return, the sum of all deductions allowed
under this section for those dependent children shall not exceed two
thousand five hundred dollars ($2,500) in a taxable year.
(d) (1) The Franchise Tax Board may prescribe rules, standards,
criteria, guidelines, procedures, determinations, or notices
necessary or appropriate to carry out the purposes of this section.
(2) The Administrative Procedure Act (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 rule, standard, criterion, guideline,
procedure, determination, or notice established or issued by the
Franchise Tax Board pursuant to this section.
(e) This section shall be repealed on December 1, 2021.
SEC. 5. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.