SB 693, as amended, Correa. Personal income tax: credits:begin insert exclusions:end insert school expenses.
The Personal Income Tax Lawbegin insert imposes a tax based upon gross income, and defines gross income as all income from whatever source derived, unless specifically excluded. The Personal Income Tax Lawend insert allows various credits against the tax imposed by that law.
This bill would, for taxable years beginning on or after January 1, 2014, and before January 1, 2019, allowbegin insert either an exclusion from gross income orend insert a credit against that tax tobegin delete low-income and middle-incomeend deletebegin insert qualifiedend insert
parents and guardiansbegin insert, as defined,end insert for education-related expenses, as defined,begin delete not to exceed $500, and a credit against that tax to qualified taxpayers,end deletebegin insert in specified amounts. This bill would also allow a credit against that tax for qualified teachers,end insert as defined, for instructional materials and classroom supplies, not to exceed $250.
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:
begin insertThe Legislature finds and declares all of the
2following:end insert
3(a) While ensuring the quality education of all of California’s
4school children is a shared responsibility of the general public, it
5is foremost the duty of individual parents and teachers.
6(b) State tax relief
for education can help empower and engage
7low- and middle-income families in personally caring for their
8own school children’s learning needs, which they know most
9intimately.
10(c) State tax relief for education expenses, leveraged with
11current federal deductions, can further support and strengthen
12new teachers for successful careers in their noble profession.
Section 17052.5 is added to the Revenue and Taxation
15Code, to read:
(a) For each taxable year beginning on or after
17January 1, 2014, and before January 1, 2019, there shall be allowed
18as a credit against the “net tax,” as defined in Section 17039, the
19qualified amount that was paid or incurred for qualified
20education-related expenses for one or more dependent children by
21abegin delete low-income or middle-incomeend deletebegin insert qualifiedend insert parent or guardian during
22the taxable year.
23(b) For purposes of this section:
24(1) “Dependent
children” means children who attend
25kindergarten or anybegin insert ofend insert grades 1 to 12, inclusive, in California at a
26public, charter, or private school that has a current private school
27affidavit on file with the State Department of Education in the
28taxable year and who meet the requirements of Section
29begin delete152(c)(1)(B), (D), end deletebegin insert152(c)(1)(D) end insertand (E) of the Internal Revenue
30Code.
31(2) “Qualified amount” means the following:
end delete
32(A) If the qualified education-related expenses are two hundred
33fifty dollars ($250) or less, the amount paid or incurred for those
34expenses.
35(B) If the qualified education-related expenses are more than
36two hundred fifty dollars ($250) and less than one thousand two
37hundred fifty dollars ($1,250), two hundred fifty dollars ($250)
P3 1plus 25 percent of the difference between the amount paid or
2incurred for those expenses and two hundred fifty dollars ($250).
3(C) If the qualified education-related expenses are more than
4one thousand two hundred fifty dollars ($1,250), five hundred
5dollars ($500).
6(3) (A) “Qualified education-related expenses” means the costs
7of textbooks, school supplies, including, but not limited to, pens,
8paper, pencils, notebooks, calculators, and rulers, school uniforms,
9computers, computer hardware, and educational computer software
10used to learn academic subjects, tuition, tutoring,
11psychoeducational diagnostic evaluations to assess the cognitive
12and academic abilities of pupils, special education services for
13pupils who have an individualized education program or its
14equivalent, academic after-school programs, out-of-school
15enrichment programs, public transportation, third-party
16transportation, and the rental or purchase of educational equipment
17required for classes held during the regular school year.
18(2) “Household income” has the same meaning as “adjusted
19gross income,” as defined in Section 17072.
20(3) “Qualified amount” means the amount paid for incurred
21for qualified education expenses.
22(4) (A) “Qualified education-related expenses” means the
23kindergarten or any of grades 1 to 12, inclusive, costs of: textbooks
24and school supplies, including, but not limited to, pens, paper,
25pencils, notebooks, calculators, and rulers; the rental or purchase
26of educational equipment required for classes during the regular
27school day; school uniforms that are not part of a cocurricular
28activity; computers, computer hardware, and educational computer
29software used to lean academic subjects; tuition for a private
30school with kindergarten or any of grades 1 to 12, inclusive, for
31college courses at public
institutions or independent nonprofit
32colleges, or for summer school courses that satisfy high school
33graduation requirements; psychoeducational diagnostic
34evaluations to assess the cognitive and academic abilities of pupils;
35special education and related services for pupils who have an
36individualized education program; out-of-school enrichment
37programs, tutoring, and summer programs that are academic in
38nature; and public transportation or third-party transportation
39expenses for traveling directly to and from school.
P4 1(B) “Qualified education-related expenses” shall not include
2any expenses for the items described in subparagraph (A) that are
3
used in a trade or business.
7 4(4) “Low-income or middle-income
end delete
5begin insert(5)end insertbegin insert end insertbegin insert“Qualifiedend insert parent or guardian” means a parent or legal
6guardian of a full-time pupil who is under 21 years of age at the
7close of the school year who meets both of the following
8requirements:
9(A) Both the pupil and the parent or guardian reside in California
10when the qualified education-related expensesbegin delete wereend deletebegin insert
are end insert paid or
11incurred.
12(B) The household income does not exceedbegin delete 300end deletebegin insert 200end insert percent of
13the federal Income Eligibility Guidelines published by the Food
14and Nutrition Service of the United States Department of
15Agriculture for use in determining eligibility for reduced price
16meals.
17(5) “Tuition” means tuition for a private school with
18kindergarten or any grades 1 to 12, inclusive, or for college courses
19or summer
school courses that satisfy high school graduation
20requirements.
21(c) (1) The credit amount shall be limited to five hundred dollars
22($500) per household.
23(2) If more than one parent or guardian qualifies for this credit,
24the following applies:
25(A) The credit shall be allowed to the parent or guardian having
26custody for the greater portion of the calendar year.
27(B) If the child resides with more than one parent or guardian
28for the same amount of time during the taxable year, the parent or
29guardian with the highest adjusted gross income shall be allowed
30the credit.
31(c) The total amount of credit available pursuant to this section
32per qualified parent or guardian shall not exceed five hundred
33dollars ($500) per taxable year, except as provided in paragraphs
34(1) and (2).
35(1) If the qualified parent or guardian is a married individual,
36a credit pursuant to this section shall be allowed only if the
37qualified parent or guardian and the qualified parent or guardian’s
38spouse file a joint return for the taxable year in which the credit
39is claimed.
P5 1(2) If qualified parents or guardians file individual returns, the
2total combined credit amount allowed pursuant to this section on
3
both returns shall not exceed five hundred dollars ($500).
4(d) In the case where the credit allowed by this section exceeds
5the “net tax,” the excess may be carried over to reduce the “net
6tax” in the following year, and succeeding four years if necessary,
7until the credit is exhausted.
8(e) (1) The Franchise Tax Board may prescribe rules, guidelines,
9or procedures necessary or appropriate to carry out the purposes
10of this section.
11(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
12Division 3 of Title 2 of the Government Code shall not apply to
13any standard, criterion, procedure, determination, rule, notice, or
14guideline established or issued by the Franchise Tax Board
15pursuant
to this section.
16(f) (1) The credit allowed by this section shall be in lieu of any
17exclusion allowed by Section 17158.
18(2) The credit allowed by this section shall not be allowed by
19for any expense incurred by a qualified teacher for instructional
20material and classroom supplies, as defined by Section 17052.7.
4 21(f)
end delete
22begin insert(g)end insert This section shall remain in effect only until December 1,
232019, and as of that date is repealed, unless a later enacted statute,
24that is enacted before January 1, 2019, deletes or extends that date.
Section 17052.7 is added to the Revenue and Taxation
27Code, to read:
(a) begin insert(1)end insertbegin insert end insert For each taxable year beginning on or after
29January 1, 2014, and before January 1, 2019, there shall be allowed
30as a credit against the “net tax,” as defined in Section 17039, an
31amount equal to the amount paid or incurred by a qualifiedbegin delete taxpayerend delete
32begin insert teacherend insert during the taxable year for instructional materials and
33classroom supplies, not to
exceed two hundred fifty dollars ($250)begin insert,
34except as provided in paragraph (2)end insert.
35(2) Subject to the maximum credit amount allowed per qualified
36teacher, for qualified teachers who are married and filing a joint
37return there shall be allowed a credit not to exceed five hundred
38dollars ($500).
39(b) For purposes of this section:
P6 1(1) “Instructional materials and classroom supplies” means any
2unreimbursed expenses, otherwise deductible as a trade or business
3expense, for books, supplies, computer equipment, including
4related software and services and other equipment,
and
5supplementary materials used in the classroombegin insert, including, but not
6limited to, supplies for courses in health and physical educationend insert.
7(2) “Qualified taxpayer” means a person who works at least 900
8hours in the school year as a teacher, instructor, counselor,
9principal, or aide in a school for kindergarten or any grades 1 to
1012, inclusive.
11(c) A qualified taxpayer shall be allowed this credit only for the
12first three years of employment as a teacher, instructor, counselor,
13principal, or aide in a school for kindergarten or any grades 1 to
1412, inclusive.
15(2) “Qualified teacher” means a teacher who meets all of the
16following requirements:
17(A) The individual has worked at least 900 hours in the school
18year as a teacher, in a school offering instruction in kindergarten
19or any of grades 1 to 12, inclusive, in California at a public,
20charter, or private school that has a current private school affidavit
21on file with the State Department of Education in the taxable year.
22(B) The teacher is primarily engaged in the duty of imparting
23knowledge to pupils by teaching, instructing, or lecturing.
24(C) The teacher customarily and regularly exercises discretion
25and independent judgment in performing the duties of a teacher.
26(D) The teacher is not employed as a tutor, teaching assistant,
27instructional aide, student teacher, day care provider, vocational
28instructor, or similar position.
29(c) The credit allowed pursuant to this section shall be available
30as follows:
31(1) For taxable years beginning on or after January 1, 2014,
32and before
January 1, 2015, the credit shall be available only to
33qualified teachers with no more than one year of employment as
34a qualified teacher.
35(2) For taxable years beginning on or after January 1, 2015,
36and before January 1, 2016, the credit shall be available only to
37qualified teachers with no more than two consecutive years of
38employment as a qualified teacher.
39(3) For taxable years beginning on or after January 1, 2016,
40and before January 1, 2019, the credit shall be available only to
P7 1qualified teachers with no more than three consecutive years of
2employment as a qualified teacher.
3(d) In the case where the credit allowed by this section exceeds
4the “net tax,” the excess may be carried over to reduce the “net
5tax” in the following year, and succeeding four years if necessary,
6until the credit is exhausted.
7(e) (1) The Franchise Tax Board may prescribe rules, guidelines,
8or procedures necessary or appropriate to carry out the purposes
9of this section.
10(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
11Division 3 of Title 2 of the Government Code shall not apply to
12any standard, criterion, procedure, determination, rule, notice, or
13guideline established or issued by the Franchise Tax Board
14pursuant to this section.
15(f) The credit allowed by Section 17052.6 shall not be allowed
16for any expense incurred by a qualified teacher for instructional
17material and classroom supplies, as defined by paragraph (1) of
18subdivision (b).
19(f)
end delete
20begin insert(g)end insert This section shall remain in effect only until December 1,
212019, and as of that date is repealed, unless a later enacted statute,
22that is enacted before January 1, 2019, deletes or extends that date.
begin insertSection 17158 is added to the end insertbegin insertRevenue and Taxation
24Codeend insertbegin insert, to read:end insert
(a) For each taxable year beginning on or after
26January 1, 2014, and before January 1, 2019, gross income shall
27not include the qualified amount paid or incurred for qualified
28education-related expenses for one or more dependent children
29by a qualified parent or guardian during the taxable year.
30(b) For purposes of this section:
31(1) “Dependent children” means children who attend
32kindergarten or any of grades 1 to 12, inclusive, in California at
33a public, charter, or private school that has a current private
34school affidavit on file with the State Department of Education in
35the taxable year and who meet the requirements of Section
36152(c)(1)(D) and (E) of the Internal Revenue
Code.
37(2) “Qualified amount” means the amount paid for incurred
38for qualified education expenses.
39(3) (A) “Qualified education-related expenses” means the
40kindergarten or any of grades 1 to 12, inclusive, costs of: textbooks
P8 1and school supplies, including, but not limited to, pens, paper,
2pencils, notebooks, calculators, and rulers; the rental or purchase
3of educational equipment required for classes during the regular
4school day; school uniforms that are not part of a cocurricular
5activity; computers, computer hardware, and educational computer
6software used to lean academic subjects; tuition for a private
7school with kindergarten or any of grades 1 to 12, inclusive, for
8college courses at public institutions or independent nonprofit
9colleges, or for summer school courses that satisfy high school
10graduation requirements; psychoeducational diagnostic
11
evaluations to assess the cognitive and academic abilities of pupils;
12special education and related services for pupils who have an
13individualized education program; out-of-school enrichment
14programs, tutoring, and summer programs that are academic in
15nature; and public transportation or third-party transportation
16expenses for traveling directly to and from school.
17(B) “Qualified education-related expenses” shall not include
18any expenses for the items described in subparagraph (A) that are
19used in a trade or business.
20(4) “Qualified parent or guardian” means a parent or legal
21guardian of a full-time pupil who is under 21 years of age at the
22close of the school year who meets both of the following
23requirements:
24(A) Both the pupil and the parent or guardian reside in
25California when the qualified education-related
expenses are paid
26or incurred.
27(B) The household income does not exceed 200 percent of the
28federal Income Eligibility Guidelines published by the Food and
29Nutrition Service of the United States Department of Agriculture
30for use in determining eligibility for reduced price meals.
31(c) The total qualified amount excluded from gross income shall
32not exceed two thousand five hundred dollars ($2,500) per taxable
33year per qualified parent or guardian, except as provided in
34paragraphs (1) and (2).
35(1) If the qualified parent or guardian is a married individual,
36an exclusion pursuant to this section shall be allowed only if the
37qualified parent or guardian and the qualified parent or guardian’s
38spouse file a joint return for the taxable year in which the exclusion
39is claimed.
P9 1(2) If qualified parents or guardians file individual returns, the
2total combined exclusion amount allowed pursuant to this section
3on both returns shall not exceed two thousand five hundred dollars
4($2,500).
5(d) (1) The Franchise Tax Board may prescribe rules,
6guidelines, or procedures necessary or appropriate to carry out
7the purposes of this section.
8(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
9Division 3 of Title 2 of the Government Code shall not apply to
10any standard, criterion, procedure, determination, rule, notice, or
11guideline established or issued by the Franchise Tax Board
12pursuant to this section.
13(e) The exclusion allowed by this section shall be in lieu of any
14credit allowed by Section 17052.5.
15(f) This section shall remain in effect only until December 1,
162019, and as of that date is repealed, unless a later enacted statute,
17that is enacted before January 1, 2019, deletes or extends that
18date.
This act provides for a tax levy within the meaning of
21Article IV of the Constitution and shall go into immediate effect.
O
97