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AB 376

Personal Income Tax Law: Corporation Tax Law: wildfires: exclusions.

2025-2026 Regular Session Introduced by David Tangipa

AB 376 temporarily excludes certain wildfire-related settlement and insurance payments from California income taxes for individuals and businesses, 2023–2028 (and 2025–2030 for ins

In committee: Set, second hearing. Referred to REV. & TAX. suspense file.
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Bill Summary · AB 376

AB 376 (Tangipa) — Summary

Main purpose

AB 376 creates temporary California income tax exclusions (for both Personal Income Tax and Corporation Tax) for certain wildfire-related payments. The exclusions are intended to prevent additional tax burden on individuals, homeowners, renters, and businesses that receive settlements or insurance proceeds to replace property or cover expenses from fires in disaster-affected areas.

Key provisions

  • Adds three new Revenue & Taxation Code provisions:
    • Section 17139 — temporarily excludes from gross income “qualified amounts” received in settlement to replace property damaged or destroyed by wildfire (PIT).
    • Section 24309.4 — similar exclusion for corporations (Corporation Tax Law).
    • Section 17139.1 — (as amended) excludes “qualified insurance proceeds” received under homeowner’s or renter’s insurance for fire damage occurring in a jurisdiction the Governor proclaims to be in a state of emergency (PIT).
  • Effective periods:
    • Sections 17139 and 24309.4: apply to taxable years beginning on or after January 1, 2023 and before January 1, 2028 (the text also states these sections “remain in effect only until December 1, 2028” and are then repealed).
    • Section 17139.1: applies to taxable years beginning on or after January 1, 2025 and before January 1, 2030 (bill text limits the insurance-proceeds exclusion to that window).
  • Definitions and conditions:
    • “Qualified taxpayer” includes owners of real property, residents, or businesses located in areas damaged by wildfire who paid or incurred expenses and received settlement or insurance payments arising from the wildfire.
    • “Qualified amount” means settlement payments to replace damaged/destroyed property located in wildfire-damaged areas; “qualified insurance proceeds” are amounts from homeowner’s or renter’s policies for fire damage in Governor-declared emergency areas.
    • Settlement payments must be made by a “settlement entity” approved by a class action settlement administrator; that entity must provide documentation to the Franchise Tax Board (FTB) or taxpayer upon request.
  • Reporting: By November 1, 2028 the FTB must report to the Legislature the number of taxpayers who excluded qualified amounts and the aggregate amount of those payments (treated as an exception to certain disclosure restrictions).
  • Legislative findings: The bill declares the exclusions serve a public purpose and are not a prohibited gift of public funds.
  • Immediate effect: The bill would take effect immediately as a tax levy.

Who is affected

  • Individuals (homeowners, renters, and residents) and businesses with operations located in wildfire-damaged areas who receive settlements or insurance payments as defined.
  • Settlement entities and class action administrators (documentation and approval requirements).
  • Franchise Tax Board (administration and reporting duties).
  • State fiscal outlook: referred to fiscal committee and suspense file, indicating potential budgetary impact.

Procedural status (as of April 25, 2025)

  • Introduced February 3, 2025.
  • Multiple committee referrals and amendments; read and amended in committee.
  • April 25, 2025 — In committee: set for second hearing; referred to Assembly Revenue & Taxation suspense file.

(Prepared from bill text and legislative digest dated April 2025.)

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

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