| 1 | 1 | | CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 2616Introduced by Assembly Member LeeFebruary 14, 2024 An act to add Section 17225.5 to the Revenue and Taxation Code, relating to housing, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTAB 2616, as introduced, Lee. Personal income tax: mortgage interest deduction.The Personal Income Tax Law allows various deductions in computing the income that is subject to the taxes imposed by that law, including, in modified conformity with federal income tax laws, a deduction for a limited amount of interest paid on acquisition indebtedness, as defined, with respect to a qualified residence of the taxpayer. Existing law limits the aggregate amount treated as acquisition indebtedness for these purposes to $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayers principal residence and one other residence selected by the taxpayer, as provided.This bill, for taxable years beginning on or after January 1, 2025, would disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence.This bill would require the Franchise Tax Board, in consultation with the Department of Finance, to estimate the amount of additional revenue resulting from the above-described modifications made with respect to the calculation of taxable income under the Personal Income Tax Law by this bill and to notify the Controller of that amount, as provided.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 XIIIA 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 take effect immediately as a tax levy.Digest Key Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 17225.5 is added to the Revenue and Taxation Code, to read:17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount.SEC. 2. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 3 | 3 | | CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 2616Introduced by Assembly Member LeeFebruary 14, 2024 An act to add Section 17225.5 to the Revenue and Taxation Code, relating to housing, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTAB 2616, as introduced, Lee. Personal income tax: mortgage interest deduction.The Personal Income Tax Law allows various deductions in computing the income that is subject to the taxes imposed by that law, including, in modified conformity with federal income tax laws, a deduction for a limited amount of interest paid on acquisition indebtedness, as defined, with respect to a qualified residence of the taxpayer. Existing law limits the aggregate amount treated as acquisition indebtedness for these purposes to $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayers principal residence and one other residence selected by the taxpayer, as provided.This bill, for taxable years beginning on or after January 1, 2025, would disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence.This bill would require the Franchise Tax Board, in consultation with the Department of Finance, to estimate the amount of additional revenue resulting from the above-described modifications made with respect to the calculation of taxable income under the Personal Income Tax Law by this bill and to notify the Controller of that amount, as provided.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 XIIIA 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 take effect immediately as a tax levy.Digest Key Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO |
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| 9 | 9 | | CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION |
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| 10 | 10 | | |
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| 11 | 11 | | Assembly Bill |
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| 12 | 12 | | |
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| 13 | 13 | | No. 2616 |
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| 14 | 14 | | |
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| 15 | 15 | | Introduced by Assembly Member LeeFebruary 14, 2024 |
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| 17 | 17 | | Introduced by Assembly Member Lee |
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| 18 | 18 | | February 14, 2024 |
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| 20 | 20 | | An act to add Section 17225.5 to the Revenue and Taxation Code, relating to housing, to take effect immediately, tax levy. |
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| 21 | 21 | | |
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| 22 | 22 | | LEGISLATIVE COUNSEL'S DIGEST |
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| 23 | 23 | | |
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| 24 | 24 | | ## LEGISLATIVE COUNSEL'S DIGEST |
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| 25 | 25 | | |
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| 26 | 26 | | AB 2616, as introduced, Lee. Personal income tax: mortgage interest deduction. |
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| 28 | 28 | | The Personal Income Tax Law allows various deductions in computing the income that is subject to the taxes imposed by that law, including, in modified conformity with federal income tax laws, a deduction for a limited amount of interest paid on acquisition indebtedness, as defined, with respect to a qualified residence of the taxpayer. Existing law limits the aggregate amount treated as acquisition indebtedness for these purposes to $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayers principal residence and one other residence selected by the taxpayer, as provided.This bill, for taxable years beginning on or after January 1, 2025, would disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence.This bill would require the Franchise Tax Board, in consultation with the Department of Finance, to estimate the amount of additional revenue resulting from the above-described modifications made with respect to the calculation of taxable income under the Personal Income Tax Law by this bill and to notify the Controller of that amount, as provided.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 XIIIA 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 take effect immediately as a tax levy. |
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| 30 | 30 | | The Personal Income Tax Law allows various deductions in computing the income that is subject to the taxes imposed by that law, including, in modified conformity with federal income tax laws, a deduction for a limited amount of interest paid on acquisition indebtedness, as defined, with respect to a qualified residence of the taxpayer. Existing law limits the aggregate amount treated as acquisition indebtedness for these purposes to $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayers principal residence and one other residence selected by the taxpayer, as provided. |
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| 32 | 32 | | This bill, for taxable years beginning on or after January 1, 2025, would disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence. |
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| 33 | 33 | | |
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| 34 | 34 | | This bill would require the Franchise Tax Board, in consultation with the Department of Finance, to estimate the amount of additional revenue resulting from the above-described modifications made with respect to the calculation of taxable income under the Personal Income Tax Law by this bill and to notify the Controller of that amount, as provided. |
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| 35 | 35 | | |
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| 36 | 36 | | 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 XIIIA of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature. |
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| 37 | 37 | | |
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| 38 | 38 | | This bill would take effect immediately as a tax levy. |
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| 39 | 39 | | |
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| 40 | 40 | | ## Digest Key |
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| 42 | 42 | | ## Bill Text |
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| 44 | 44 | | The people of the State of California do enact as follows:SECTION 1. Section 17225.5 is added to the Revenue and Taxation Code, to read:17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount.SEC. 2. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 46 | 46 | | The people of the State of California do enact as follows: |
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| 48 | 48 | | ## The people of the State of California do enact as follows: |
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| 50 | 50 | | SECTION 1. Section 17225.5 is added to the Revenue and Taxation Code, to read:17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount. |
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| 52 | 52 | | SECTION 1. Section 17225.5 is added to the Revenue and Taxation Code, to read: |
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| 54 | 54 | | ### SECTION 1. |
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| 56 | 56 | | 17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount. |
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| 58 | 58 | | 17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount. |
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| 60 | 60 | | 17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount. |
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| 64 | 64 | | 17225.5. (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply. |
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| 66 | 66 | | (b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount. |
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| 68 | 68 | | (2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount. |
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| 70 | 70 | | SEC. 2. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 72 | 72 | | SEC. 2. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 74 | 74 | | SEC. 2. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. |
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| 76 | 76 | | ### SEC. 2. |
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