AB 386: Personal Income Tax Law: Corporation Tax Law: credits: student loan payments.

Official summary

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

(1)The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would allow a credit against those taxes to a qualified taxpayer for student loan payments, as defined, made by the qualified taxpayer on behalf of a qualified full-time employee, as defined, not to exceed $3,000 per employee during the taxable year. The bill would define qualified taxpayer for this purpose to mean a taxpayer whose employees do not perform jobs described by specified federal law. The bill would limit the aggregate amount of credits allocated to $25,000,000 per year, and would require the Franchise Tax Board, in coordination with the Student Aid Commission, to allocate the credit through tentative credit reservations, as described.

(2)The Personal Income Tax Law, in modified 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, 2027, and before January 1, 2032, would provide an exclusion from gross income for student loan payments made by a qualifying employer, as defined, on behalf of a qualified taxpayer, as defined, that is a full-time employee.

(3)Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would include additional information required for any bill authorizing a new tax expenditure.

Sponsors

Sponsors by party (alphabetical): Republican 1

“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 5, 2025In committee: Set, first hearing. Held under submission.
4. April 29, 2025Re-referred to Com. on REV. & TAX.
5. April 28, 2025From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
6. March 17, 2025In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
7. February 18, 2025Referred to Com. on REV. & TAX.
8. February 4, 2025From printer. May be heard in committee March 6.
9. February 3, 2025Read first time. To print.