Plain English Breakdown
The official text lists two possible start dates (2026 or 2027) and end dates (2031 or 2032), indicating uncertainty about the exact effective year in this summary version.
Tax Credits and Income Exclusions for Employer Student Loan Payments
This law allows qualified businesses to claim a tax credit or exclude income when they pay student loans for full-time employees, with specific limits on the amount per employee and total credits available each year.
What This Bill Does
- Allows a qualified taxpayer to claim a tax credit of up to $3,000 per employee for paying their student loans during the taxable year.
- Excludes these loan payments from gross income calculations for full-time employees who receive them from a qualifying employer.
- Sets a total yearly limit of $25 million on all credits allocated under this law.
- Requires the Franchise Tax Board, in coordination with the Student Aid Commission, to allocate credits through tentative credit reservations.
- Includes required goals, performance indicators, and data collection rules as needed for new tax expenditures.
Who It Names or Affects
- Qualified taxpayers (businesses) whose employees do not perform jobs described by specified federal law.
- Full-time employees of these qualified taxpayers who receive student loan payments from their employers.
- The Franchise Tax Board and the Student Aid Commission, which manage credit allocations.
Terms To Know
- Tax credit
- An amount that reduces the total tax a business owes to the government dollar for dollar.
- Gross income exclusion
- A rule that lets an employee not count certain money as taxable income on their personal taxes.
- Qualified taxpayer
- A business whose employees do not perform jobs described by specified federal law.
Limits and Unknowns
- The credit and exclusion apply only to taxable years beginning on or after January 1, 2026 (or 2027) and before January 1, 2031 (or 2032).
- Credits are limited to $3,000 per employee and a total of $25 million for all businesses combined each year.
- The specific federal laws that define which jobs make an employer ineligible are not listed in this summary.