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AB-702 • 2026

Personal income tax: exclusions: interest income: theft.

Personal income tax: exclusions: interest income: theft.

Taxes
Passed Legislature

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

Sponsor
Ta
Last action
2026-02-02
Official status
From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
Effective date
Not listed

Plain English Breakdown

The official source material does not provide details on how verification or proof of stolen interest income will work.

Tax Exclusion for Stolen Interest Income

AB-702 provides an exclusion from personal income tax for interest income that is stolen without the taxpayer's consent and against their will, starting from January 1, 2026.

What This Bill Does

  • Adds a new rule to California’s Personal Income Tax Law, providing an exclusion from gross income for interest income generated on an investment during the taxable year if it was stolen, sold, or otherwise transferred without the taxpayer's consent and against their will.
  • Applies this new exclusion starting from January 1, 2026, for tax years beginning after that date.

Who It Names or Affects

  • Taxpayers who have had interest income generated on an investment stolen, sold, or otherwise transferred without their consent and against their will starting from January 1, 2026.

Terms To Know

Gross Income
Total income before any deductions or exclusions are applied.
Taxpayer
A person who is required to pay taxes on their income.

Limits and Unknowns

  • The bill does not specify how stolen interest income will be verified or proven.
  • It only applies to theft that happens after January 1, 2026.

Bill History

  1. 2026-02-02 California Legislative Information

    From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

  2. 2026-01-31 California Legislative Information

    Died pursuant to Art. IV, Sec. 10(c) of the Constitution.

  3. 2025-04-21 California Legislative Information

    In committee: Set, first hearing. Hearing canceled at the request of author.

  4. 2025-03-24 California Legislative Information

    In committee: Hearing postponed by committee.

  5. 2025-03-03 California Legislative Information

    Referred to Com. on REV. & TAX.

  6. 2025-02-15 California Legislative Information

    From printer. May be heard in committee March 17.

  7. 2025-02-14 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 702, as introduced, Ta.
Personal income tax: exclusions: interest income: theft.
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. Existing law, in modified conformity with federal income tax law, allows a deduction for specified investment interest, not to exceed the net investment income of the taxpayer for the taxable year, as provided.
This bill, for taxable years beginning on or after January 1, 2026, would provide an exclusion from gross income for any amount of interest income that a taxpayer generates on an investment during the taxable year and, without the qualified taxpayer’s consent and against the qualified taxpayer’s will, is stolen, sold, or otherwise transferred, as specified.
This
bill would take effect immediately as a tax levy.

Current Bill Text

Read the full stored bill text 
Download Bill PDF