Personal Income Tax Law: Corporation Tax Law: exemptions: wildfire.

Plain English Breakdown

The official source material does not provide specific criteria for what qualifies as a 'qualified wildfire disaster'.

Wildfire Disaster Tax Exemption

The law changes how wildfire disaster settlements are taxed and provides funding for the Franchise Tax Board to manage these tax exemptions.

What This Bill Does

• Changes the definition of income that can be excluded from taxes due to a wildfire disaster settlement, limiting it to qualified amounts made in connection with a qualified wildfire disaster.
• Appropriates $10,000 from the General Fund for the Franchise Tax Board to manage these tax exemptions.
• Requires approval by 2/3 of each house of the Legislature because it increases taxes under California's Constitution.

Who It Names or Affects

• Taxpayers who receive settlements due to wildfires in California.
• The Franchise Tax Board, which administers state personal income and corporation taxes.

Terms To Know

Qualified wildfire disaster

A specific type of wildfire event that meets certain criteria for tax exemption purposes.

Franchise Tax Board

The agency responsible for administering state personal income taxes and corporation franchise and income taxes in California.

Limits and Unknowns

• Does not specify the exact criteria for what qualifies as a 'qualified wildfire disaster'.
• It is unclear how this change will affect taxpayers who have already received settlements before the new definition was implemented.
• The bill does not provide details on how the $10,000 appropriation will be used.

Official Summary Text

SB 159, Committee on Budget and Fiscal Review.
Personal Income Tax Law: Corporation Tax Law: exemptions: wildfire.
Existing law establishes, in the Government Operations Agency, the Franchise Tax Board consisting of the Controller, the Director of Finance, and the Chairperson of the State Board of Equalization. Existing law prescribes various powers and duties to the Franchise Tax Board, including, among other things, the administration of state personal income taxes and corporation franchise and income taxes.
The Personal Income Tax Law, in conformity with federal income tax laws, defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from income, including, for taxable years beginning on or after January 1, 2021, and before January 1, 2030, an exclusion from income for any qualified taxpayer, as
defined, for amounts received in settlement in connection with a wildfire in the state, as provided.
This bill would amend the definitions provided in that exclusion from tax and would limit the exclusion to qualified amounts made in connection with a qualified wildfire disaster, as defined.
This bill would also appropriate $10,000 from the General Fund to the Franchise Tax Board to administer qualified wildfire disaster settlements, as specified.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of
2
/
3
of the membership of each house of the Legislature.
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Current Bill Text

Download Bill PDF