AB 232: Natural disasters: catastrophe savings accounts: personal income tax.
This bill allows a deduction from adjusted gross income for amounts contributed to a catastrophe savings account, which is a regular savings account or money market account established to pay for qualified catastrophe expenses. The account must meet certain requirements and be established by a qualified taxpayer. The deduction is available for taxable years beginning on or after January 1, 2026, and before January 1, 2031. A qualified taxpayer who uses a distribution from the account for an expense other than a qualified catastrophe expense is subject to a penalty. The bill also provides an exclusion from gross income for interest earned by the account until December 1, 2030. The bill includes findings and reporting requirements to ensure it achieves its goals and objectives. The bill takes effect immediately as a tax levy, allowing taxpayers to take advantage of the deduction and exclu…
| Feb. 02, 2026 | From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. |
| Jan. 31, 2026 | Died pursuant to Art. IV, Sec. 10(c) of the Constitution. |
| May. 23, 2025 | In committee: Held under submission. |
| May. 21, 2025 | Joint Rule 62(a), file notice suspended. (Page 1627.) |
| May. 21, 2025 | Joint Rule 62(a), file notice suspended. (Page 1627.) |
| Amended IN Assembly April 11, 2025 |
| Introduced by Assembly Members Calderon and Gipson (Coauthor: Assembly Member Valencia) |
January 13, 2025 |
LEGISLATIVE COUNSEL'S DIGEST
Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Protection and Innovation.
This bill, until January 1, 2030, would authorize a homeowner to establish one catastrophe savings account that, among other things, has the specified purpose of covering the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake. The bill would require distributions from a catastrophe savings account to be used to cover qualified catastrophe expenses, defined as expenses paid or incurred due to damage to or loss of a homeowner’s primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency. The bill would impose penalties on homeowners who use a distribution to cover an expense other than a qualified catastrophe expense, unless specified exceptions apply. The bill would require the penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.
The people of the State of California do enact as follows:
For purposes of this division, the following definitions apply:
(a)“Catastrophe Savings Account” means a regular savings account or money market account established by a residential property insurance policyholder in this state to cover the deductible for a policy that covers wildfire, flood, or earthquake for the policyholder’s primary residence or by an individual to cover uninsured losses for the homeowner’s primary residence from a wildfire, flood, or earthquake.
(b)“Qualified catastrophe expenses” mean expenses paid or incurred due to damage to or loss of a homeowner’s primary residence caused by a wildfire, flood, or earthquake that has been declared by the Governor to be an emergency.
(a)A homeowner may establish no greater than one catastrophe savings account. A catastrophe savings account shall be labeled as a catastrophe savings account, and the specified purpose of the account shall be to cover the amount of insurance deductibles and other uninsured portions of risks of loss from wildfire, flood, or earthquake.
(b)(1)A distribution from a catastrophe savings account shall be used to cover qualified catastrophe expenses. If a homeowner uses a distribution from a catastrophe savings account to cover an expense other than a qualified catastrophe expense, the homeowner shall be subject to a penalty to be determined and collected by the Commissioner of Financial Protection and Innovation, and deposited in the Financial Protection Fund.
(2)The penalty imposed by this subdivision shall not apply if either of the following apply at the time the distribution is made:
(A)The homeowner no longer owns a primary residence.
(B)The homeowner is at least 70 years of age and did not obtain insurance on their primary residence.
(c)A catastrophe savings account is not subject to attachment, levy, garnishment, or legal process in this state.
This division shall become inoperative on January 1, 2030.
SEC. 2.SECTION 1.
17072.
(a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.SEC. 3.SEC. 2.
17141.8.
(a) For each taxable year beginning on or after January 1,SEC. 4.SEC. 3.
17207.15.
(a) For each taxable year beginning on or after January 1,(A)In the case of an individual whose qualified deductible is not more than one thousand dollars ($1,000), two thousand dollars ($2,000).
(B)
(C)
(d)
(e)