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.
Summary
AB 2336 would create two temporary personal income tax exclusions for taxable years beginning on or after January 1, 2026, and before January 1, 2031. First, it would exclude the first $25,000 of overtime pay received by a taxpayer in a year from gross income. Second, it would exclude the first $25,000 received as proceeds from a defined benefit retirement plan from gross income. Both provisions would sunset on January 1, 2031.
The bill is framed as a targeted tax relief measure for workers putting in extra hours and for retirees with limited retirement income. It also includes the findings required for a new tax expenditure under Revenue and Taxation Code Section 41, stating the goal of providing financial support to those facing rising costs and those living on fixed or limited retirement income, and stating that there is no available data to collect or report for the exclusions. Because it is designated a tax levy, the bill would take effect immediately if enacted.
Impact
AB 2336 would amend the Revenue and Taxation Code by adding Sections 17147 and 17147.1, temporarily changing California’s definition of gross income for personal income tax purposes. The measure would reduce taxable income for eligible taxpayers by excluding specified overtime earnings and defined benefit pension income up to $25,000 each, which could lower state income tax liability for workers and retirees who qualify. The exclusions would operate only through the 2030 tax year and then be repealed automatically.
Sentiment
The available context suggests generally favorable intent, with the bill presented as relief for working Californians and retirees. The digest identifies it as a majority-vote measure, but there are no committee transcripts or recorded votes in the provided materials to show detailed debate or opposition. The absence of recorded discussion makes the overall sentiment appear supportive but not fully documented.
Contention
The main policy issues likely to draw scrutiny are the revenue cost of creating new tax expenditures and the choice to exempt only the first $25,000 of each category of income. The bill’s supporters appear to be those seeking tax relief for overtime workers and retirees, while potential critics would likely focus on fiscal impact, fairness, and whether the exclusions are the most effective way to target assistance. Another possible point of contention is the bill’s statement that there is no available data to collect or report, which may raise concerns about how the exclusions would be evaluated.