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AB 2336

Personal Income Tax Law: exclusions from income: retirement: overtime.

2025-2026 Regular Session Introduced by Ali Macedo

AB 2336 temporarily excludes up to $25,000 of overtime pay and up to $25,000 of defined benefit plan proceeds from California gross income for 2026–2030, repealing Jan 1, 2031.

In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
#personalincometaxlaw #exclusionsfromincome #overtime #retirement
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WeVote Research Nonpartisan
Bill Summary · AB 2336

Summary of AB 2336 (2025-2026, California)

Purpose and Intent

  • AB 2336 adds temporary exclusions from gross income under the California Personal Income Tax Law.
  • The bill aims to provide financial relief for workers who log overtime and for retirees receiving defined benefit plan proceeds, by excluding a portion of these earnings from taxable income.
  • It is a temporary measure, operating for taxable years 2026 through 2030 (ending effective January 1, 2031), and it takes effect as a tax levy.

Key Provisions

Exclusion for Overtime Pay

  • Section 17147 (new):
    • For taxable years beginning on or after January 1, 2026, and before January 1, 2031, the first $25,000 of overtime pay received in the taxable year is excluded from gross income.
    • The exclusion applies to overtime pay as defined by the bill (overtime earned in a given year).
    • The section is repealed effective January 1, 2031.

Exclusion for Proceeds from Defined Benefit Plans

  • Section 17147.1 (new):
    • For the same period (2026 through 2030), the first $25,000 received by a taxpayer as proceeds from a defined benefit plan (as defined in Section 414(j) of the Internal Revenue Code) is excluded from gross income.
    • This exclusion also terminates on January 1, 2031.

Administrative and Compliance Notes

  • Section 3 (Sec. 41 compliance):
    • The bill states the stated goal of the exclusions is to provide financial support to workers who work extra hours to meet rising costs and to those on limited retirement income.
    • It notes that there is no available data to collect or report specifically for these exclusions.
  • Section 4:
    • The act is enacted as a tax levy with immediate effect upon passage.

Affected Parties and Impacts

Who Would Be Affected

  • California residents who earn overtime pay in taxable years 2026–2029 (through 2030) would see up to $25,000 of their overtime pay excluded from gross income each year.
  • California residents receiving proceeds from defined benefit retirement plans would also see up to $25,000 of such proceeds excluded from gross income each year during the same period.

Financial Impact

  • Taxpayers meeting the criteria for overtime or defined-benefit proceeds could experience a reduction in taxable income of up to $25,000 per applicable year.
  • The measure is described as a tax levy; it creates temporary tax expenditures rather than permanent exclusions.

Timelines and Procedural Details

  • Effective Window: Taxable years beginning on or after January 1, 2026, and before January 1, 2031.
  • Repeal: The exclusions terminate and are repealed on January 1, 2031.
  • Immediate Effect: The bill provides for immediate effect as a tax levy upon enactment.
  • Legislative Process: Introduced February 19, 2026; assigned to the California Revenue and Taxation Committee; faced hearings in 2026 with standard committee processes.

Summary in One Sentence

AB 2336 would temporarily exclude the first $25,000 of overtime pay and the first $25,000 of defined benefit plan proceeds from California gross income for 2026–2030, with the exclusions repealing on January 1, 2031, and enacted as a tax levy to provide targeted financial relief.

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

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