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Bill

SB 1343

Income tax credit: sales and use tax paid: natural disasters.

2025-2026 Regular Session Introduced by Ben Allen and 7 co-sponsors

Creates a temporary tax credit (up to 4000 per year, 10000 per disaster) for unreimbursed sales/use tax on rebuilding a primary residence after a natural disaster.

Set for hearing May 14.
#incometaxcredit #naturaldisasters #salesandusetaxpaid
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WeVote Research Nonpartisan
Bill Summary · SB 1343

Overview

SB 1343, as amended, would create a temporary income tax credit for California taxpayers who incur purchases of certain qualified tangible personal property to rebuild a primary residence damaged by a natural disaster. The credit targets sales and use tax reimbursements paid for such purchases and is available for specific years (taxable years 2027 through 2031, with a sunset and repeal provisions). It also requires evaluation and reporting on the program’s effectiveness.

Main purpose and intent

  • Provide targeted financial relief to individuals rebuilding homes damaged by natural disasters by allowing a credit against net personal or corporate taxes for qualifying tax payments related to rebuilding.
  • Encourage rebuilding efforts after disasters by offsetting some of the sales and use tax costs incurred in purchases of necessary rebuilding goods.

Key provisions and changes

  • Creation of Section 17052.13 of the Revenue and Taxation Code to establish the credit.
  • Eligibility window:
    • Taxable years beginning on or after January 1, 2027, and before January 1, 2032.
  • Credit against net tax:
    • Credit equals the amount of tax reimbursement paid by the taxpayer for sales tax on qualified tangible personal property.
    • Credit also available against use tax paid for qualified tangible personal property.
    • In a separate provision, qualified taxpayers may claim a credit for qualified tax payments (see below) up to $4,000 per taxable year.
  • Covered period:
    • “Covered period” starts on the date of the natural disaster damaging the primary residence and ends three years later (or ends earlier if damage-ceased, state of emergency ends, or the last eligible tax year for the credit occurs).
  • Qualified tangible personal property:
    • Major appliances and residential furniture with a sales price of up to $3,500 per item.
    • Includes bundled purchases with per-item limit of $3,500.
  • Residential building supplies:
    • Items up to $500 per item (e.g., roofing materials, windows, insulation, paint, etc.) used for restoration/rebuilding due to disaster, as determined by the Franchise Tax Board.
  • Major appliances and residential furniture examples include refrigerators, freezers, ranges, microwaves, washers/dryers, etc.
  • Definitions:
    • Natural disaster: Governor-declared state of emergency under Government Code.
    • Principal residence: Homeowners’ exemption applicable residence.
    • Qualified taxpayer: A taxpayer whose principal residence was damaged and received a reassessment.
    • Qualified tax payment: An unreimbursed sales or use tax payment for qualified tangible personal property during the covered period.
  • Credit limitations and mechanics:
    • Individual credit cap: up to $4,000 per taxable year (per disaster, with overall per-disaster cap of $10,000 combined for the credit claims; see the bill’s text for exact cap language and potential consolidation).
    • Carryover: Any excess credit can be carried forward to offset net tax in later years for up to five years.
    • Income-based reduction: The annual credit amount is reduced by $6 for every $100 of AGI above specified thresholds ($250,000 for jointheads/surviving/spouse or $125,000 for single/married filing separately); if two taxpayers file jointly, total claimed cannot exceed $4,000.
    • If insurance proceeds or other reimbursements are received for the same expenditures, the tax due for the year is increased by the portion of the credit attributed to the reimbursed amount, with corresponding adjustments to the credit/deduction basis.
  • Interaction with other credits:
    • Credit provided under this section is in lieu of other credits for the same amounts.
    • Deductions for amounts paid or incurred that are used for the credit must be reduced by the credit amount.
  • Reporting and evaluative requirements:
    • Legislature-relevant goals and performance indicators included.
    • The Legislative Analyst’s Office must review the credits by January 1, 2029, evaluating demand and economic impact.
    • The Franchise Tax Board must report by June 30 of each year (starting 2029) on the number of taxpayers claiming the credit and the total amount claimed.
  • Sunset and repeal:
    • The section remains in effect only until December 1, 2031 (with a related 2037 reference in the text; the exact repeal date should be read carefully in the statute), after which it is repealed.
  • Effective date:
    • Immediate effect as a tax levy upon enactment.

Who would be affected

  • Qualified taxpayers whose principal residence was damaged by a natural disaster and who incur unreimbursed sales or use tax payments for qualifying tangible personal property during the covered period.
  • Homeowners who purchase qualifying major appliances, residential furniture, and residential building supplies to rebuild or restore their primary residence.
  • Taxpayers who file personal or corporate taxes and meet income thresholds (affecting the net tax payable and the potential to claim the credit).
  • Nonprofit housing developers acting on behalf of taxpayers may incur eligible tax reimbursements and be eligible to participate in the credit.

Procedural and timeline aspects

  • Legislative path and hearings: The bill was introduced in 2026 and advanced through committee stages, with a hearing schedule noted in the action history.
  • Evaluation schedule:
    • LAO review due by January 1, 2029.
    • FTB reporting due by June 30 of each year starting 2029.
  • Sunset/repeal:
    • The credit program is scheduled to expire and be repealed after December 1, 2031 (with related subparts indicating ongoing review but eventual termination if not renewed).
  • Administrative implementation:
    • The Franchise Tax Board would administer the credit and adopt regulations as needed to implement the provision.

Note: The bill text contains some drafting idiosyncrasies (e.g., potential cross-references and minor inconsistencies in numerical caps within the summary). Readers should review the exact statutory language in the final enrolled bill for precise caps and interactions.

Compiled from official sources — confirm details with the bill’s official record.

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