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AB 159

Personal Income Tax Law: Corporation Tax Law: exemptions: wildfire.

2025-2026 Regular Session

AB 159 exempts wildfire disaster settlement payments from taxable income, providing crucial tax relief to affected homeowners and businesses in California until 2030.

Ordered to inactive file at the request of Senator Grayson.
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Bill Summary · AB 159

Summary of AB 159: Personal Income Tax Law and Corporation Tax Law Exemptions for Wildfire

Bill Overview

Bill Number: AB 159
Title: Personal Income Tax Law: Corporation Tax Law: exemptions: wildfire
Introduced: January 08, 2025
Status: Ordered to inactive file at the request of Senator Grayson
Classification: Bill, Appropriation
Subject: Corporation Tax Law, Personal Income Tax Law, Exemptions, Wildfire

Purpose and Intent

AB 159 aims to amend existing tax laws in California to provide specific exemptions related to income received from settlements connected to wildfire disasters. The intent is to support taxpayers who have suffered losses due to wildfires by ensuring that certain settlement amounts are not counted as taxable income.

Key Provisions

  1. Exclusion from Gross Income:

    • The bill amends Sections 17138.7 and 24309.2 of the Revenue and Taxation Code to clarify that for taxable years beginning on or after January 1, 2021, and before January 1, 2030, gross income will not include any "qualified amounts" received by "qualified taxpayers" in connection with a "qualified wildfire disaster."

  2. Definitions:

    • Qualified Amount: Any amount received from a settlement entity by a qualified taxpayer related to a qualified wildfire disaster.
    • Qualified Taxpayer: Includes individuals or businesses that own property, reside, or operate a business in areas affected by a qualified wildfire disaster.
    • Qualified Wildfire Disaster: Defined as any wildfire disaster for which a state of emergency has been declared by the Governor or the President.
    • Settlement Entity: The entity responsible for making settlement payments to qualified taxpayers.

  3. Documentation Requirements:

    • Settlement entities must provide documentation of settlement payments upon request by the Franchise Tax Board or the taxpayer.

  4. Appropriation:

    • The bill appropriates $10,000 from the General Fund to the Franchise Tax Board to administer the qualified wildfire disaster settlements.

  5. Legislative Approval Requirement:

    • The bill includes a provision that any changes resulting in higher taxes require a two-thirds approval from both houses of the Legislature.

  6. Effective Date:

    • The bill is designed to take effect immediately as it relates to appropriations in the Budget Bill.

Impact

  • Affected Parties: The bill primarily impacts taxpayers who have been affected by wildfires in California, including homeowners, business owners, and residents in declared disaster areas.
  • Tax Relief: By excluding certain settlement amounts from taxable income, the bill aims to provide financial relief to those recovering from the economic impacts of wildfires.

Procedural Aspects

  • The bill has undergone several legislative actions, including amendments and committee reviews. It was ordered to the inactive file on September 13, 2025, at the request of Senator Grayson, indicating that it may not progress further in the current legislative session.

Conclusion

AB 159 seeks to provide essential tax relief for individuals and businesses affected by wildfires in California by clarifying tax exemptions related to settlement payments. Its successful implementation would require legislative approval and effective administration by the Franchise Tax Board.

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

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