Personal income tax: deduction: medical expenses.

Plain English Breakdown

The candidate explanation included claims about specific groups of individuals who would be affected, but these are not explicitly stated or defined in the official bill text. Therefore, such details have been omitted.

Medical Expense Deduction Change

The bill changes the threshold for deducting medical expenses from income taxes, lowering it to 4% of federal adjusted gross income starting in 2026 and limiting deductions to $5,000 per year before January 1, 2031.

What This Bill Does

• Changes the limit for deducting medical expenses to 4% of federal adjusted gross income starting in 2026.
• Limits the deduction amount to $5,000 per year before January 1, 2031.
• Defines a 'qualified taxpayer' as someone with an income not over 300% of the federal poverty level who does not claim other medical expense deductions.

Who It Names or Affects

• People who pay for their own medical and dental expenses.

Terms To Know

Qualified taxpayer

An individual with adjusted gross income that does not exceed 300% of the federal poverty level and who does not take an itemized deduction for costs of medical care pursuant to the above-referenced provisions on their California income tax return.

Limits and Unknowns

• The bill only applies to taxable years starting on or after January 1, 2026.
• It is unclear how many people will qualify for the new deduction limits.

Official Summary Text

SB 1137, as amended, Valladares.
Personal income tax: deduction: medical expenses.
The Personal Income Tax Law, in conformity or modified conformity with federal income tax laws, allows various deductions in computing the income that is subject to the taxes imposed by that law, including a deduction for the medical and dental expenses paid during the taxable year, not compensated for by insurance or otherwise, for the medical or dental care of the taxpayer, spouse, or a dependent, to the extent that such expenses exceed 7.5% of federal adjusted gross income.
This bill would, for taxable years beginning on or after January 1, 2026,
instead allow that deduction to the extent that those medical and dental expenses exceed 4% of federal adjusted gross income.
and
before January 1, 2031, allow a deduction from adjusted gross income for the costs of medical care, as defined, of a qualified taxpayer to the extent the costs exceed 4% of the qualified taxpayer’s federal adjusted gross income. The bill would limit the deduction to $5,000. The bill would define “qualified taxpayer” for this purpose to mean an individual with adjusted gross income that does not exceed 300% of the federal poverty level and who does not take an itemized deduction for costs of medical care pursuant to the above-referenced provisions on their California income tax return.
Existing law requires any bill
expanding an existing tax deduction to contain, among other things, specific goals, purposes, and
objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
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.
The bill would provide findings and declarations relating to the goals of the expansion of the deduction for medical and dental expenses.
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

Download Bill PDF