AB 232: Natural disasters: catastrophe savings accounts: personal income tax.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

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, 2026, and before January 1, 2031, would allow a deduction from adjusted gross income for amounts contributed by 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, 2026, and before January 1, 2031, would provide an exclusion from gross income for interest earned by a catastrophe savings 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.

Sponsors

Sponsors by party (alphabetical): Democratic 3

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. February 2, 2026From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
2. January 31, 2026Died pursuant to Art. IV, Sec. 10(c) of the Constitution.
3. May 23, 2025In committee: Held under submission.
4. May 21, 2025Joint Rule 62(a), file notice suspended. (Page 1627.)
5. May 21, 2025In committee: Set, first hearing. Referred to APPR. suspense file.
6. May 14, 2025In committee: Hearing postponed by committee.
7. May 6, 2025From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (May 5). Re-referred to Com. on APPR.
8. April 21, 2025In committee: Set, first hearing. Referred to suspense file.
9. April 21, 2025Re-referred to Com. on REV. & TAX.
10. April 11, 2025From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
11. March 3, 2025Coauthors revised.
12. March 3, 2025From committee: Do pass and re-refer to Com. on REV. & TAX. (Ayes 8. Noes 0.) (March 3). Re-referred to Com. on REV. & TAX.