AB 2336
Personal Income Tax Law: exclusions from income: retirement: overtime.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Revenue and Taxation
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- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill modifies California’s personal income tax law to provide a specific exclusion from gross income. It excludes the first $25,000 of overtime pay received by a taxpayer during a taxable year and the first $25,000 received as proceeds from a defined benefit plan. These exclusions will apply from January 1, 2026, through December 31, 2030.
Key provisions
- Excludes the first $25,000 of overtime pay from gross income.
- Excludes the first $25,000 of proceeds from a defined benefit plan from gross income.
- The exclusions apply to taxable years beginning on or after January 1, 2026.
- The exclusions will expire on December 31, 2030.
- The bill includes provisions related to reporting requirements for tax expenditures.
- The bill takes effect immediately as a tax levy.
Who is affected
- Taxpayers
- Employees who receive overtime pay
- Individuals with defined benefit plans
Notable changes
- Introduces a new exclusion for overtime pay and defined benefit plan proceeds.
- The exclusion is temporary, expiring in 2031.
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AB2336:v99#DOCUMENT
Bill Start
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 2336
| Introduced by Assembly Member Macedo |
| February 19, 2026 |
An act to add and repeal Sections 17147 and 17147.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2336, as introduced, Macedo. 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.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 17147 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. 2.
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 41 of the Revenue and Taxation Code, as it related to the exclusions from income allowed by Sections 17147 and 17147.1 of the Revenue and Taxation Code, as added by Sections 1 and 2 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.