Amended IN Assembly April 11, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 232Introduced by Assembly Members Calderon and Gipson(Coauthor: Assembly Member Valencia)January 13, 2025 An act to add Division 21 (commencing with Section 60000) to the Financial Code, and to amend Section 17072 of, and to add Sections 17141.8 and 17207.15 to, the Revenue and Taxation Code, relating to natural disasters, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTAB 232, as amended, Calderon. Natural disasters: catastrophe savings accounts: personal income tax.Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Protection and Innovation.This bill, until January 1, 2030, would authorize a homeowner to establish one catastrophe savings account that, among other things, has the specified purpose of covering the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake. The bill would require distributions from a catastrophe savings account to be used to cover qualified catastrophe expenses, defined as expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency. The bill would impose penalties on homeowners who use a distribution to cover an expense other than a qualified catastrophe expense, unless specified exceptions apply. The bill would require the penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.This bill, for taxable years beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, would allow a deduction from adjusted gross income for amounts contributed by an individual homeowner a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define catastrophe savings account to mean a regular savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense.The Personal Income 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, 2026, and before January 1, 2030, 2031, would provide an exclusion from gross income for interest income earned by a catastrophe savings account. account until December 1, 2030.Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.This bill would include findings and reporting requirements in compliance with this requirement.This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1.Division 21 (commencing with Section 60000) is added to the Financial Code, to read:21.Catastrophe Savings Accounts60000.For purposes of this division, the following definitions apply:(a)Catastrophe Savings Account means a regular savings account or money market account established by a residential property insurance policyholder in this state to cover the deductible for a policy that covers wildfire, flood, or earthquake for the policyholders primary residence or by an individual to cover uninsured losses for the homeowners primary residence from a wildfire, flood, or earthquake.(b)Qualified catastrophe expenses mean expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency.60010.(a)A homeowner may establish no greater than one catastrophe savings account. A catastrophe savings account shall be labeled as a catastrophe savings account, and the specified purpose of the account shall be to cover the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake.(b)(1)A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a homeowner uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the homeowner shall be subject to a penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.(2)The penalty imposed by this subdivision shall not apply if either of the following apply at the time the distribution is made:(A)The homeowner no longer owns a primary residence.(B)The homeowner is at least 70 years of age and did not obtain insurance on their primary residence.(c)A catastrophe savings account is not subject to attachment, levy, garnishment, or legal process in this state.60020.This division shall become inoperative on January 1, 2030.SEC. 2.SECTION 1. Section 17072 of the Revenue and Taxation Code is amended to read:17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.SEC. 3.SEC. 2. Section 17141.8 is added to the Revenue and Taxation Code, to read:17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.(b) This section shall become inoperative on December 1, 2030.(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.SEC. 4.SEC. 3. Section 17207.15 is added to the Revenue and Taxation Code, to read:17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).(B)(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).(C)(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.(c) For purposes of this section, qualified the following definitions apply:(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:(A) Is designated as a catastrophe savings account by the account holder.(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.(C) Is the only catastrophe savings account established by the qualified taxpayer.(D) Is established by a residential property owner in this state for their primary residence.(E) The written governing instrument creating the account provides for both of the following:(i) All contributions to the account are required to be in cash.(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.(2) Qualified catastrophe expenses means either of the following:(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed. (d)(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:(A) The number of taxpayers allowed a deduction pursuant to this section.(B) The average amount of the deduction allowed pursuant to this section.(C) The total amount of deductions allowed pursuant to this section.(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(e)(f) This section shall become inoperative on December 1, 2030. 2031.SEC. 5.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
Amended IN Assembly April 11, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 232Introduced by Assembly Members Calderon and Gipson(Coauthor: Assembly Member Valencia)January 13, 2025 An act to add Division 21 (commencing with Section 60000) to the Financial Code, and to amend Section 17072 of, and to add Sections 17141.8 and 17207.15 to, the Revenue and Taxation Code, relating to natural disasters, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTAB 232, as amended, Calderon. Natural disasters: catastrophe savings accounts: personal income tax.Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Protection and Innovation.This bill, until January 1, 2030, would authorize a homeowner to establish one catastrophe savings account that, among other things, has the specified purpose of covering the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake. The bill would require distributions from a catastrophe savings account to be used to cover qualified catastrophe expenses, defined as expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency. The bill would impose penalties on homeowners who use a distribution to cover an expense other than a qualified catastrophe expense, unless specified exceptions apply. The bill would require the penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.This bill, for taxable years beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, would allow a deduction from adjusted gross income for amounts contributed by an individual homeowner a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define catastrophe savings account to mean a regular savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense.The Personal Income 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, 2026, and before January 1, 2030, 2031, would provide an exclusion from gross income for interest income earned by a catastrophe savings account. account until December 1, 2030.Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.This bill would include findings and reporting requirements in compliance with this requirement.This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Amended IN Assembly April 11, 2025
Amended IN Assembly April 11, 2025
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Assembly Bill
No. 232
Introduced by Assembly Members Calderon and Gipson(Coauthor: Assembly Member Valencia)January 13, 2025
Introduced by Assembly Members Calderon and Gipson(Coauthor: Assembly Member Valencia)
January 13, 2025
An act to add Division 21 (commencing with Section 60000) to the Financial Code, and to amend Section 17072 of, and to add Sections 17141.8 and 17207.15 to, the Revenue and Taxation Code, relating to natural disasters, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 232, as amended, Calderon. Natural disasters: catastrophe savings accounts: personal income tax.
Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Protection and Innovation.This bill, until January 1, 2030, would authorize a homeowner to establish one catastrophe savings account that, among other things, has the specified purpose of covering the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake. The bill would require distributions from a catastrophe savings account to be used to cover qualified catastrophe expenses, defined as expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency. The bill would impose penalties on homeowners who use a distribution to cover an expense other than a qualified catastrophe expense, unless specified exceptions apply. The bill would require the penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.This bill, for taxable years beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, would allow a deduction from adjusted gross income for amounts contributed by an individual homeowner a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define catastrophe savings account to mean a regular savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense.The Personal Income 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, 2026, and before January 1, 2030, 2031, would provide an exclusion from gross income for interest income earned by a catastrophe savings account. account until December 1, 2030.Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.This bill would include findings and reporting requirements in compliance with this requirement.This bill would take effect immediately as a tax levy.
Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Protection and Innovation.
This bill, until January 1, 2030, would authorize a homeowner to establish one catastrophe savings account that, among other things, has the specified purpose of covering the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake. The bill would require distributions from a catastrophe savings account to be used to cover qualified catastrophe expenses, defined as expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency. The bill would impose penalties on homeowners who use a distribution to cover an expense other than a qualified catastrophe expense, unless specified exceptions apply. The bill would require the penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions from gross income in calculating adjusted gross income.
This bill, for taxable years beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, would allow a deduction from adjusted gross income for amounts contributed by an individual homeowner a qualified taxpayer, as defined, to a catastrophe savings account, in accordance with specified provisions. The bill would define catastrophe savings account to mean a regular savings account or money market account with a financial institution that, among other requirements, is established to pay for the qualified catastrophe expenses, as defined, of a qualified taxpayer establishing the account, as provided. The bill would subject a qualified taxpayer to a specified penalty if they use a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense.
The Personal Income 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, 2026, and before January 1, 2030, 2031, would provide an exclusion from gross income for interest income earned by a catastrophe savings account. account until December 1, 2030.
Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, deductions, exclusions, or exemptions, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
This bill would include findings and reporting requirements in compliance with this requirement.
This bill would take effect immediately as a tax levy.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1.Division 21 (commencing with Section 60000) is added to the Financial Code, to read:21.Catastrophe Savings Accounts60000.For purposes of this division, the following definitions apply:(a)Catastrophe Savings Account means a regular savings account or money market account established by a residential property insurance policyholder in this state to cover the deductible for a policy that covers wildfire, flood, or earthquake for the policyholders primary residence or by an individual to cover uninsured losses for the homeowners primary residence from a wildfire, flood, or earthquake.(b)Qualified catastrophe expenses mean expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency.60010.(a)A homeowner may establish no greater than one catastrophe savings account. A catastrophe savings account shall be labeled as a catastrophe savings account, and the specified purpose of the account shall be to cover the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake.(b)(1)A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a homeowner uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the homeowner shall be subject to a penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.(2)The penalty imposed by this subdivision shall not apply if either of the following apply at the time the distribution is made:(A)The homeowner no longer owns a primary residence.(B)The homeowner is at least 70 years of age and did not obtain insurance on their primary residence.(c)A catastrophe savings account is not subject to attachment, levy, garnishment, or legal process in this state.60020.This division shall become inoperative on January 1, 2030.SEC. 2.SECTION 1. Section 17072 of the Revenue and Taxation Code is amended to read:17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.SEC. 3.SEC. 2. Section 17141.8 is added to the Revenue and Taxation Code, to read:17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.(b) This section shall become inoperative on December 1, 2030.(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.SEC. 4.SEC. 3. Section 17207.15 is added to the Revenue and Taxation Code, to read:17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).(B)(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).(C)(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.(c) For purposes of this section, qualified the following definitions apply:(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:(A) Is designated as a catastrophe savings account by the account holder.(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.(C) Is the only catastrophe savings account established by the qualified taxpayer.(D) Is established by a residential property owner in this state for their primary residence.(E) The written governing instrument creating the account provides for both of the following:(i) All contributions to the account are required to be in cash.(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.(2) Qualified catastrophe expenses means either of the following:(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed. (d)(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:(A) The number of taxpayers allowed a deduction pursuant to this section.(B) The average amount of the deduction allowed pursuant to this section.(C) The total amount of deductions allowed pursuant to this section.(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(e)(f) This section shall become inoperative on December 1, 2030. 2031.SEC. 5.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
For purposes of this division, the following definitions apply:
(a)Catastrophe Savings Account means a regular savings account or money market account established by a residential property insurance policyholder in this state to cover the deductible for a policy that covers wildfire, flood, or earthquake for the policyholders primary residence or by an individual to cover uninsured losses for the homeowners primary residence from a wildfire, flood, or earthquake.
(b)Qualified catastrophe expenses mean expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency.
(a)A homeowner may establish no greater than one catastrophe savings account. A catastrophe savings account shall be labeled as a catastrophe savings account, and the specified purpose of the account shall be to cover the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake.
(b)(1)A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a homeowner uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the homeowner shall be subject to a penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.
(2)The penalty imposed by this subdivision shall not apply if either of the following apply at the time the distribution is made:
(A)The homeowner no longer owns a primary residence.
(B)The homeowner is at least 70 years of age and did not obtain insurance on their primary residence.
(c)A catastrophe savings account is not subject to attachment, levy, garnishment, or legal process in this state.
This division shall become inoperative on January 1, 2030.
SEC. 2.SECTION 1. Section 17072 of the Revenue and Taxation Code is amended to read:17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.
SEC. 2.SECTION 1. Section 17072 of the Revenue and Taxation Code is amended to read:
### SEC. 2.SECTION 1.
17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.
17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.
17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.
17072. (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.
(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.
(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys attorneys fees relating to awards to whistleblowers, shall not apply.
(d) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, Section 62(a) of the Internal Revenue Code, relating to the general rule, is modified to provide that the deduction under Section 17207.15 shall be allowed in determining adjusted gross income.
SEC. 3.SEC. 2. Section 17141.8 is added to the Revenue and Taxation Code, to read:17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.(b) This section shall become inoperative on December 1, 2030.(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.
SEC. 3.SEC. 2. Section 17141.8 is added to the Revenue and Taxation Code, to read:
### SEC. 3.SEC. 2.
17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.(b) This section shall become inoperative on December 1, 2030.(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.
17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.(b) This section shall become inoperative on December 1, 2030.(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.
17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.(b) This section shall become inoperative on December 1, 2030.(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.
17141.8. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, gross income does not include interest income earned by a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code. Section 17207.15.
(b) This section shall become inoperative on December 1, 2030.
(c) Any interest that accrues to a catastrophe savings account after December 1, 2030, shall be included as gross income.
SEC. 4.SEC. 3. Section 17207.15 is added to the Revenue and Taxation Code, to read:17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).(B)(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).(C)(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.(c) For purposes of this section, qualified the following definitions apply:(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:(A) Is designated as a catastrophe savings account by the account holder.(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.(C) Is the only catastrophe savings account established by the qualified taxpayer.(D) Is established by a residential property owner in this state for their primary residence.(E) The written governing instrument creating the account provides for both of the following:(i) All contributions to the account are required to be in cash.(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.(2) Qualified catastrophe expenses means either of the following:(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed. (d)(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:(A) The number of taxpayers allowed a deduction pursuant to this section.(B) The average amount of the deduction allowed pursuant to this section.(C) The total amount of deductions allowed pursuant to this section.(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(e)(f) This section shall become inoperative on December 1, 2030. 2031.
SEC. 4.SEC. 3. Section 17207.15 is added to the Revenue and Taxation Code, to read:
### SEC. 4.SEC. 3.
17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).(B)(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).(C)(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.(c) For purposes of this section, qualified the following definitions apply:(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:(A) Is designated as a catastrophe savings account by the account holder.(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.(C) Is the only catastrophe savings account established by the qualified taxpayer.(D) Is established by a residential property owner in this state for their primary residence.(E) The written governing instrument creating the account provides for both of the following:(i) All contributions to the account are required to be in cash.(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.(2) Qualified catastrophe expenses means either of the following:(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed. (d)(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:(A) The number of taxpayers allowed a deduction pursuant to this section.(B) The average amount of the deduction allowed pursuant to this section.(C) The total amount of deductions allowed pursuant to this section.(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(e)(f) This section shall become inoperative on December 1, 2030. 2031.
17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).(B)(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).(C)(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.(c) For purposes of this section, qualified the following definitions apply:(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:(A) Is designated as a catastrophe savings account by the account holder.(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.(C) Is the only catastrophe savings account established by the qualified taxpayer.(D) Is established by a residential property owner in this state for their primary residence.(E) The written governing instrument creating the account provides for both of the following:(i) All contributions to the account are required to be in cash.(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.(2) Qualified catastrophe expenses means either of the following:(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed. (d)(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:(A) The number of taxpayers allowed a deduction pursuant to this section.(B) The average amount of the deduction allowed pursuant to this section.(C) The total amount of deductions allowed pursuant to this section.(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(e)(f) This section shall become inoperative on December 1, 2030. 2031.
17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).(B)(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).(C)(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.(c) For purposes of this section, qualified the following definitions apply:(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:(A) Is designated as a catastrophe savings account by the account holder.(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.(C) Is the only catastrophe savings account established by the qualified taxpayer.(D) Is established by a residential property owner in this state for their primary residence.(E) The written governing instrument creating the account provides for both of the following:(i) All contributions to the account are required to be in cash.(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.(2) Qualified catastrophe expenses means either of the following:(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed. (d)(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:(A) The number of taxpayers allowed a deduction pursuant to this section.(B) The average amount of the deduction allowed pursuant to this section.(C) The total amount of deductions allowed pursuant to this section.(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(e)(f) This section shall become inoperative on December 1, 2030. 2031.
17207.15. (a) For each taxable year beginning on or after January 1, 2025, 2026, and before January 1, 2030, 2031, there shall be allowed as a deduction the amount contributed by an individual homeowner a qualified taxpayer to a catastrophe savings account established pursuant to Division 21 (commencing with Section 60000) of the Financial Code, in accordance with subdivision (b). this section.
(b) (1) The total amount that may be contributed to a catastrophe savings account in a taxable year shall not exceed the following:
(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).
(B)
(A) In the case of an individual whose qualified deductible is more than one thousand dollars ($1,000), the amount equal to the lesser of a qualified taxpayer whose primary residence is insured, fifteen thousand dollars ($15,000) or twice the amount of the homeowners qualified deductible. ($15,000).
(C)
(B) In the case of an individual who chooses not to obtain insurance on their primary residence, a qualified taxpayer whose primary residence is not insured, two hundred fifty thousand dollars ($250,000), but in no event shall exceed the value of the individual homeowners primary residence. ($250,000).
(2) If a homeowner qualified taxpayer contributes in excess of the limits provided in paragraph (1), the homeowner qualified taxpayer shall withdraw the amount of the excess contributions and include that amount in income for purposes of Section 17041 in the year of withdrawal.
(c) For purposes of this section, qualified the following definitions apply:
(1) Catastrophe savings account means a regular savings account or money market account with a financial institution that meets all of the following requirements:
(A) Is designated as a catastrophe savings account by the account holder.
(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, for the exclusive benefit of a qualified taxpayer establishing the account.
(C) Is the only catastrophe savings account established by the qualified taxpayer.
(D) Is established by a residential property owner in this state for their primary residence.
(E) The written governing instrument creating the account provides for both of the following:
(i) All contributions to the account are required to be in cash.
(ii) The account is established to pay, pursuant to the requirements of this section, for the qualified catastrophe expenses of a qualified taxpayer establishing the account.
(2) Qualified catastrophe expenses means either of the following:
(A) Expenses paid or incurred due to damage to or loss of a homeowners primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency, including a qualified deductible of a homeowners insurance policy.
(B) Expenses paid or incurred by a homeowner to incorporate property-level mitigation efforts, as provided in subparagraph (B) of paragraph (1) of subdivision (d) of Section 2644.9 of Title 10 of the California Code of Regulations, to their primary residence.
(3) Qualified deductible means the deductible for the individuals homeowners insurance policy for a homeowners primary residence.
(4) Qualified taxpayer means an individual, or a married couple if filing a joint return, who owns a primary residence in this state.
(d) A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a qualified taxpayer uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the qualified taxpayer shall be subject to a penalty of 2.5 percent of the amount improperly distributed.
(d)
(e) (1) For purposes of complying with Section 41, as it applies to the deduction allowed by this section, the Legislature finds and declares as follows:
(A) California is not immune from natural disasters such as wildfires, floods, and earthquakes.
(B) California must seek a multiprong multipronged approach to address natural disasters which includes public- and private-market options and personal responsibility.
(C) The promotion of financial resiliency benefits cities, counties, consumers, and policyholders.
(D) Catastrophe savings accounts are intended to assist consumers in paying for expenses incurred or related to a major natural disaster.
(E) The catastrophe savings accounts would foster pre-event mitigation and postevent recovery from catastrophes by accumulating funds that can be used to supplement insurance coverage and offset the costs of remediation and repair.
(2) The performance indicator indicators for the Legislature to use in determining if the deduction achieves its stated purpose is the include all of the following:
(A) The number of taxpayers allowed a deduction pursuant to this section.
(B) The average amount of the deduction allowed pursuant to this section.
(C) The total amount of deductions allowed pursuant to this section.
(3) (A) By May 1, 2026, 2028, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a deduction pursuant to this section. performance indicators listed in paragraph (2).
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(e)
(f) This section shall become inoperative on December 1, 2030. 2031.
SEC. 5.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SEC. 5.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SEC. 5.SEC. 4. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
### SEC. 5.SEC. 4.