The Personal Income Tax Law, in modified conformity with federal income tax law, excludes from the gross income distributions to a beneficiary of, and earnings by a contributor to, a qualified tuition program, which includes a Golden State Scholarshare College Savings Trust, if specified conditions are met.

This bill, for taxable years beginning on or after January 1, 2026, would allow under that law a deduction against gross income in the amount equal to the monetary contribution made by a qualified taxpayer, as defined, to the California qualified tuition program established pursuant to the Golden State Scholarshare Trust Act not to exceed either $5,000 or $10,000, as provided. The bill would require, with exceptions, in the case of any distribution in excess of qualified higher education expenses, as defined, that the aggregate amount of the deduction allowed that reduced the qualified taxpayer’s gross income in any taxable year be added to the gross income of the qualified taxpayer in the taxable year of the distribution, as provided.

Existing law requires any bill authorizing a new tax deduction to contain, among other things, specific goals, purposes, and objectives that the tax deduction will achieve, detailed performance indicators, and data collection requirements.

The bill would make specified findings detailing the goals, purposes, and objectives of the above-described tax deduction, performance indicators for determining whether the deduction meets those goals, purposes, and objectives, and data collection requirements.

This bill would take effect immediately as a tax levy.