SB-268 • 2026

Income taxes: gross income exclusions: state of emergency: natural disaster settlements.

Taxes

Passed Legislature

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

Sponsor: Choi
Last action: 2026-02-02
Official status: Returned to Secretary of Senate pursuant to Joint Rule 56.
Effective date: Not listed

Plain English Breakdown

The term 'qualified taxpayer' was removed as it does not appear in the official source material and its definition is speculative.

Income Tax Exclusions for Disaster Relief

The bill excludes from income taxes certain payments received by people affected by disasters or emergencies to replace damaged or destroyed property, and adds requirements for new tax breaks.

What This Bill Does

Excludes from gross income the money a person receives from a settlement entity to replace property damaged or destroyed in a disaster or emergency declared by the state or local government.
Applies this exclusion only for five years starting January 1, 2025.
Requires new tax breaks to include clear goals and data on how well they work.

Who It Names or Affects

People who receive money from settlement entities to replace property damaged or destroyed in a disaster or emergency.
Tax authorities responsible for enforcing the income tax laws.

Terms To Know

Settlement entity: An organization that provides financial help after disasters, such as insurance companies or government agencies.

Limits and Unknowns

The bill does not specify how much money can be excluded from taxes.
It is unclear if this exclusion will continue after January 1, 2030.

Bill History

2026-02-02 California Legislative Information
Returned to Secretary of Senate pursuant to Joint Rule 56.
2025-05-23 California Legislative Information
May 23 hearing: Held in committee and under submission.
2025-05-20 California Legislative Information
Set for hearing May 23.
2025-05-19 California Legislative Information
May 19 hearing: Placed on APPR. suspense file.
2025-05-15 California Legislative Information
Set for hearing May 19.
2025-05-14 California Legislative Information
From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0. Page 1081.) (May 14). Re-referred to Com. on APPR.
2025-05-07 California Legislative Information
From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX.
2025-04-28 California Legislative Information
From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX.
2025-03-18 California Legislative Information
Set for hearing May 14.
2025-02-14 California Legislative Information
Referred to Com. on REV. & TAX.
2025-02-04 California Legislative Information
From printer. May be acted upon on or after March 6.
2025-02-03 California Legislative Information
Introduced. Read first time. To Com. on RLS. for assignment. To print.

Official Summary Text

SB 268, as amended, Choi.
Income taxes: gross income exclusions: state of emergency: natural disaster settlements.
The Personal Income Tax Law and the Corporation 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.
This bill, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, would provide an exclusion from gross income for amounts received from a settlement entity, as defined, by a qualified taxpayer, as defined, to replace property that is located in a city or county in this state and that was damaged or destroyed by a disaster or accidental or human-caused event for which a state of emergency or local emergency, as defined, was proclaimed.
Existing law requires a bill authorizing a new tax expenditure to contain, among other
things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill 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

Read the full stored bill text

Download Bill PDF