AB-2394 • 2026

Personal Income Tax Law: exclusions: real property.

Taxes

Passed Legislature

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

Sponsor: Lee
Last action: 2026-04-21
Official status: Re-referred to Com. on REV. & TAX.
Effective date: Not listed

Plain English Breakdown

The candidate explanation includes details that are not directly supported by the provided official summary, such as specifying a minimum age of 65 and ownership duration before the sale date.

Personal Income Tax Law: Real Property Exclusions

AB-2394 excludes certain income from the personal income tax for people aged 65 or older who have owned their primary residence for at least 20 years and sell it to another person.

What This Bill Does

Excludes income from taxes for people selling real property that meets specific conditions.
Defines a 'qualified taxpayer' as someone aged 65 or older who has owned the property for over 20 years on the date of sale.
Requires the sold property to be used by the owner as their main home and sold to another person.

Who It Names or Affects

People aged 65 or older who have owned a primary residence for at least 20 years and sell it.
The state government collecting personal income taxes.

Terms To Know

Qualified taxpayer: An individual over the age of 65 who has owned their main home for more than 20 years on the date of sale.
Qualified real property: Real estate that was used as a primary residence by someone aged 65 or older and is sold to another person.

Limits and Unknowns

The bill only applies for taxable years from January 1, 2027, through December 31, 2031.
It does not specify how the tax savings will be used or who benefits beyond those selling their homes.

Bill History

2026-04-21 California Legislative Information
Re-referred to Com. on REV. & TAX.
2026-04-20 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2026-04-06 California Legislative Information
In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
2026-03-09 California Legislative Information
Referred to Com. on REV. & TAX.
2026-02-21 California Legislative Information
From printer. May be heard in committee March 23.
2026-02-20 California Legislative Information
Read first time. To print.

Official Summary Text

AB 2394, as amended, Lee.
Personal Income Tax Law: exclusions: real property.
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 exclude from gross income
amounts
gain
received by a qualified taxpayer as a result of the sale or exchange of
certain real property.
qualified real property, as
defined.
The bill would define “qualified taxpayer” to mean an individual who is
65
55
years of age or older
and who has owned the real property for 20 years or more.
on the date of the sale. The bill would define “qualified real property” to mean real property satisfying certain conditions, including the requirement that the property was used by the qualified taxpayer as their primary residence, as specified, and that the property is sold to a natural person.
Existing law requires
any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.

Current Bill Text

Read the full stored bill text

Download Bill PDF