20250AB__233699INT INTRODUCED 2026-02-19 2025 AB INT Introduced by Assembly Member Macedo LEAD_AUTHOR ASSEMBLY Macedo

An act to add and repeal Sections and 17147.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. taxation, to take effect immediately, tax levy Personal Income Tax Law: exclusions from income: retirement: overtime. The Personal Income Tax Law, in modified conformity with federal income tax laws, defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.

This bill would, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, exclude from gross income the first $25,000 of overtime pay received by a taxpayer during the taxable year. The bill would also exclude from gross income the first $25,000 received by a taxpayer as proceeds from a defined benefit plan, as defined. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy. MAJORITY NO YES NO YES NO YES NO NO NO NO The people of the State of California do enact as follows:

SECTION 1.

Section is added to the Revenue and Taxation Code , to read: 17147. (

a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include the first twenty-five thousand dollars ($25,000) of overtime pay received during the taxable year. (

b) This

section shall remain operative only until January 1, 2031, and as of that date is repealed.

SEC.

Section 17147.1 is added to the Revenue and Taxation Code , to read: 17147.1. (

a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include the first twenty-five thousand dollars ($25,000) received by a taxpayer as proceeds from a defined benefit plan, as defined in

Section 414(

j) of the Internal Revenue Code, during the taxable year. (

b) This

section shall remain operative only until January 1, 2031, and as of that date is repealed.

SEC. 3. For purposes of complying with

Section of the Revenue and Taxation Code, as it related to the exclusions from income allowed by Sections and 17147.1 of the Revenue and Taxation Code, as added by Sections and of this act, the Legislature finds and declares as follows: (

a) The specific goal of the exclusions is to give financial support to those working extra hours to afford increasing costs and those on limited retirement income. (

b) There is no available data to collect or report with respect to the exclusions.

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.