Personal income tax: deduction: medical expenses.
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Majority
Fiscal committee
No
Appropriation
No
Current location
Appropriations
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Overview
This bill changes the rules for deducting medical expenses on California state income tax returns. Starting in 2026, taxpayers can deduct medical expenses that exceed 4% of their federal adjusted gross income, instead of the current 7.5%. The deduction is capped at $5,000 per year, and applies to individuals with adjusted gross income below 300% of the federal poverty level who don't itemize medical expenses. The bill also includes requirements for data collection and reporting on the impact of the change.
Key provisions
- Reduces the threshold for medical expense deductions from 7.5% to 4% of federal adjusted gross income.
- Caps the deduction at $5,000 per year.
- Limits eligibility to individuals with adjusted gross income below 300% of the federal poverty level.
- Excludes taxpayers who itemize medical expenses on their California income tax return.
- Requires the Franchise Tax Board to provide reports on the use of the deduction.
- Includes findings and declarations regarding the goals of the deduction expansion.
- Adds specific requirements for new tax expenditures, including performance indicators and data collection.
- Sets a sunset date for the modified deduction of December 1, 2031.
Who is affected
- Taxpayers in California
- Individuals with medical expenses
- Low-to-moderate income taxpayers
- California residents
- Healthcare consumers
Bill text
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Sponsors
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8 on record
Primary sponsor
Cosponsors
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