Bill Text: CA SB477 | 2019-2020 | Regular Session | Amended

California Senate Bill 477 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Personal income taxes: credit: deduction: qualified education loan.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed - Dead) 2019-06-24 - June 24 hearing: Heard for testimony only. [SB477 Detail]

Download: California-2019-SB477-Amended.html

Amended IN Senate May 07, 2019

Amended IN Senate April 24, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 477

Introduced by Senator Wieckowski

February 21, 2019

An act to add Section 17205 to, and to add and repeal Section 17061.6 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

SB 477, as amended, Wieckowski. Personal income taxes: credit: deduction: qualified education loan.

The Personal Income Tax Law allows various credits against the taxes imposed by that law and various deductions in computing the income that is subject to the taxes imposed by that law, including a deduction for interest paid on qualified education loans not to exceed $2,500.

This bill, for taxable years beginning on or after January 1, 2019, and before January 1, 2024, would eliminate that deduction and allow a credit to certain taxpayers against those taxes in an amount equal to the interest paid by the taxpayer during the taxable year on a qualified education loan, as ~~defined.~~ defined, not to exceed $2,000 in the case of spouses filing a joint return or $1,000 for other individuals. The bill, for taxable years beginning on or after January 1, 2024, would make that credit inoperative and would reinstate the eliminated deduction.

This bill would take effect immediately as a tax levy.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 17061.6 is added to the Revenue and Taxation Code, to read:

17061.6.

(a) For each taxable year beginning on or after January 1, 2019, and before January 1, 2024, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, an amount equal to the interest paid by the taxpayer during the taxable year on a qualified education loan. The credit allowed by this section shall not exceed two thousand dollars ($2,000) in the case of spouses filing a joint return or one thousand dollars ($1,000) for other individuals.

(b) For purposes of this section:

(1) “Dependent” has the same meaning as the term defined by Section 152 of the Internal Revenue Code, relating to dependent defined, determined without regard to Sections 152(b)(1), Section 152(b)(2), and Section 152(d)(1)(B) of the Internal Revenue Code.

(2) (A) “Qualified education loan” means an indebtedness incurred by the taxpayer solely to pay for higher education expenses that are incurred on behalf of the taxpayer or the taxpayer’s spouse or dependent, who is the taxpayer’s spouse or dependent at the time the indebtedness is incurred.

(B) “Qualified education loan” includes indebtedness used to refinance indebtedness that qualified as a qualified education loan.

(i) Indebtedness owed to a person who is related, within the meaning of Section 267(b) or 707(b) of the Internal Revenue Code, relating to relationships and certain sales or exchanges of property with respect to controlled partnerships, respectively.

(ii) Indebtedness owed to a person by reason of a loan under a qualified employer plan, as defined in Section 72(p)(4) of the Internal Revenue Code, relating to qualified employer plan, etc., or under a contract referred to in Section 72(p)(5) of the Internal Revenue Code, relating to special rules for loans, etc., from certain contracts.

(c) To be eligible for the credit allowed by this section, adjusted gross income shall not exceed the following:
(1) For spouses filing a joint return, two hundred thousand dollars ($200,000).
(2) For other individuals, one hundred thousand dollars ($100,000).
~~(c)~~

(d) This section shall remain in effect only until December 1, 2024, and as of that date is repealed.

SEC. 2.

Section 17205 is added to the Revenue and Taxation Code, to read:

17205.

(a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, Section 221 of the Internal Revenue Code, relating to interest on education loans, shall not apply under subdivision (b) of Section 17201.

(b) For taxable years beginning on or after January 1, 2024, Section 221 of the Internal Revenue Code, relating to interest on education loans, shall apply under subdivision (b) of Section 17201.