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AB-781 • 2026

Charges: health savings accounts: electricity.

Charges: health savings accounts: electricity.

Healthcare Taxes
Passed Legislature

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

Sponsor
DeMaio
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 does not provide specific details about future tax reductions or fee eliminations, only an intent statement.

Health Savings Accounts Deduction and Electricity Charges

AB-781 removes certain electricity charge regulations and introduces a tax deduction for health savings account contributions starting in 2026.

What This Bill Does

  • Removes the Public Utilities Commission's authority to set fixed charges for residential electrical customers.
  • Allows individuals to deduct their contributions to health savings accounts from their taxes starting January 1, 2026.
  • Permits rollovers from other medical savings plans into health savings accounts without penalties.

Who It Names or Affects

  • Residential electricity customers in California
  • Individuals with health savings accounts

Terms To Know

Fixed charges
A set amount charged by utility companies to cover the costs of providing service.
Health Savings Account (HSA)
An account that individuals can use to pay for medical expenses with tax-free dollars.

Limits and Unknowns

  • The bill does not specify how electricity rates will be regulated after the removal of fixed charges.
  • It is unclear what specific taxes and fees might be reduced or eliminated in future legislation.

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. 2025-04-01 California Legislative Information

    Re-referred to Com. on REV. & TAX.

  5. 2025-03-28 California Legislative Information

    From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.

  6. 2025-03-28 California Legislative Information

    Referred to Coms. on REV. & TAX. and U. & E.

  7. 2025-02-19 California Legislative Information

    From printer. May be heard in committee March 21.

  8. 2025-02-18 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 781, as amended, DeMaio.
Taxes and fees.
Charges: health savings accounts: electricity.
(1) Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission to adopt new, or expand existing, fixed charges, as defined, for the purpose of collecting a reasonable portion of the fixed costs of providing electrical service to residential customers. Under existing law, the commission may authorize fixed charges for any rate schedule applicable to a residential customer account. Existing law requires the commission, no later than July 1, 2024, to authorize a fixed charge for default residential rates on an income-graduated basis, as provided. Existing law requires increases to electrical rates and charges in rate design proceedings to be reasonable and subject to a
reasonable phase-in schedule relative to the rates and charges in effect before January 1, 2014.
This bill would repeal those provisions relating to fixed charges and rate increases.
(2) The Personal Income Tax Law authorizes various deductions in computing income that is subject to tax under that law.
This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a deduction in computing adjusted gross income in connection with health savings accounts in modified conformity with federal law. In general, the deduction would be an amount equal to the aggregate amount paid in cash during the taxable year by, or on behalf of, an eligible individual, as defined, to a health savings account of that individual, as provided. The bill, for taxable years beginning on or
after January 1, 2026, and before January 1, 2031, would also provide related conformity to that federal law with respect to the allowance of rollovers from Archer Medical Savings Accounts, health flexible spending arrangements, or health reimbursement accounts to a health savings account, and penalties in connection therewith.
Existing law imposes various taxes and fees that are administered and collected by the California Department of Tax and Fee Administration and the Franchise Tax Board.
This bill would state the intent of the Legislature to enact subsequent legislation eliminating, reducing, and restricting taxes and fees.

Current Bill Text

Read the full stored bill text 
Download Bill PDF