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AB-1726 • 2026

Natural disasters: catastrophe savings accounts: personal income tax.

Natural disasters: catastrophe savings accounts: personal income tax.

Taxes
Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
Calderon
Last action
2026-04-21
Official status
From committee: Do pass and re-refer to Com. on REV. & TAX. (Ayes 9. Noes 0.) (April 20). Re-referred to Com. on REV. & TAX.
Effective date
Not listed

Plain English Breakdown

The exact nature of 'qualified taxpayer' and specific requirements for establishing a catastrophe savings account are not detailed in the provided summary.

Natural Disasters: Catastrophe Savings Accounts

AB-1726 allows taxpayers to deduct contributions made to catastrophe savings accounts from their adjusted gross income and excludes interest earned in these accounts from gross income, starting January 1, 2027.

What This Bill Does

  • Allows a deduction from adjusted gross income for amounts contributed by a qualified taxpayer to a catastrophe savings account, beginning on taxable years starting January 1, 2027, and before January 1, 2032.
  • Defines 'catastrophe savings account' as a type of savings or money market account established with financial institutions specifically for paying qualified catastrophe expenses.
  • Imposes penalties on individuals who use funds from these accounts for non-disaster related expenses.
  • Excludes interest earned in catastrophe savings accounts from gross income, starting January 1, 2027.

Who It Names or Affects

  • Taxpayers contributing to and using catastrophe savings accounts for disaster-related expenses.

Terms To Know

Catastrophe Savings Account
A special type of savings or money market account used for saving funds to cover costs related to natural disasters.
Qualified Catastrophe Expenses
Expenses incurred as a result of a declared disaster that are eligible to be paid from a catastrophe savings account.

Limits and Unknowns

  • The tax benefits and penalties apply only for the period starting January 1, 2027, through December 31, 2031.
  • Details about specific disaster-related expenses that qualify are not provided in the summary.

Bill History

  1. 2026-04-21 California Legislative Information

    From committee: Do pass and re-refer to Com. on REV. & TAX. (Ayes 9. Noes 0.) (April 20). Re-referred to Com. on REV. & TAX.

  2. 2026-03-16 California Legislative Information

    Referred to Coms. on B. & F. and REV. & TAX.

  3. 2026-02-06 California Legislative Information

    From printer. May be heard in committee March 8.

  4. 2026-02-05 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 1726, as introduced, Calderon.
Natural disasters: catastrophe savings accounts: personal income tax.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.
This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would allow a deduction from adjusted gross income for amounts contributed by a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define “catastrophe savings account” to mean a savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution
from a catastrophe savings account to cover an expense other than a qualified catastrophe expense.
The Personal Income Tax Law, in conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.
This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would provide an exclusion from gross income for interest earned by a catastrophe savings account, as specified.
Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
This bill would include findings and reporting requirements in compliance with this requirement.
This bill would take effect immediately as a tax levy.

Current Bill Text

Read the full stored bill text 
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