Bill
AB 1620
AB 1620 creates a temporary California tax deduction (2026–2030) for premiums on homeowners’ insurance for a primary residence to ease rising costs.
Date Introduced: January 22, 2026
Author: Assembly Member Kate Sanchez (co-sponsor)
Purpose and intent
- Establish a temporary deduction under the California Personal Income Tax Law for the cost of homeowners’ insurance premiums on the taxpayer’s primary residence.
- Align California tax provisions with modified conformity to federal tax rules, addressing rising homeowners’ insurance costs and reduced insurer availability in some parts of the state.
Key provisions
- Deduction window: Available for taxable years beginning on or after January 1, 2026, and before January 1, 2031.
- Eligible deduction: The amount paid or incurred by a taxpayer during the taxable year as premiums on a homeowners’ insurance policy on the taxpayer’s primary residence.
- Definition of primary residence: A residence that qualifies for either:
- The homeowner’s exemption (Section 218), or
- The veteran’s exemption (Section 205 and related constitutional provisions).
- Purpose and performance indicators (Section 41 alignment):
- Stated goal: To help homeowners afford homeowners’ insurance, given price increases and insurer withdrawals or reductions in coverage options in parts of the state.
- Performance indicator: The number of taxpayers claiming the deduction.
- Reporting requirement:
- By December 1, 2027, and annually thereafter, the Franchise Tax Board (FTB) must report to the Legislature the number of taxpayers who claimed the deduction for the most recent tax year, to the extent data is available (an exception to standard disclosure rules).
- Sunset and repeal:
- The deduction is temporary and will remain in effect only until December 1, 2031, at which time it would be repealed.
- Tax levy note:
- The bill is described as providing for a tax levy and takes immediate effect.
Affected entities
- Californian individual taxpayers who own and occupy a primary residence and pay homeowners’ insurance premiums, and who itemize or otherwise qualify for the deduction under the bill’s framework.
- Franchise Tax Board (FTB) for administration, reporting, and data collection purposes.
- Homeowners’ insurance market in California (indirectly, by influencing demand for premiums through the deduction).
Procedural and timeline aspects
- Enactment path: Introduced January 2026; immediate effect as a tax levy if enacted.
- Data and reporting: Requires annual disclosure starting December 1, 2027.
- Sunset: Repeal effective December 1, 2031.
- Legislative milestones noted: Committee hearings and suspense file as part of the standard process; joint exposure to fiscal committee and policy deliberations.
Impact considerations
- Financial relief for homeowners facing higher premiums and insurer exit/limited coverage, potentially increasing after-tax income for affected taxpayers during the 2026–2030 window.
- Fiscal impact: The bill would create a tax expenditure; its exact revenue impact would depend on uptake and premiums paid, and would be subject to annual FTB reporting.
- Administrative: Adds a new deduction category to tax filings; requires compliance and data collection by the FTB, with a sunset determination.
Overall, AB 1620 proposes a time-limited deduction (2026–2030) for homeowners’ insurance premiums on primary residences, accompanied by defined eligibility, reporting requirements, and a sunset, intended to mitigate rising insurance costs in California.
Compiled from official sources — confirm details with the bill’s official record.
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