Personal Income Tax: tax credits: fire-resistant home improvements.

2025-2026 Regular Session Introduced by Juan Alanis and 17 co-sponsors

Provides a 40% state tax credit (up to $400 per year, $2,000 lifetime) for primary residences in high fire risk areas that install prescribed fire-hardening improvements.

In committee: Set, first hearing. Held under submission.

#personalincometax #fire-resistanthomeimprovements #taxcredits

Purpose

AB 389 would create a state personal income tax credit to help homeowners in high‑risk wildfire areas pay for specified fire‑hardening improvements to their primary residence. The stated legislative goal is to compensate homeowners for mitigation measures that reduce property damage and risk to life from wildfires.

Key provisions

Adds Section 17053.4 to the Revenue and Taxation Code to allow a credit against "net tax" (Section 17039) for taxable years beginning on or after January 1, 2025 and before January 1, 2030.

Credit amount: 40% of "qualified expenses" for eligible fire‑hardening measures.

Annual and lifetime caps: no more than $400 per taxable year and no more than $2,000 cumulatively.

If the credit exceeds the taxpayer’s net tax or the annual $400 limit, any excess may be carried over to the following year and the succeeding three years, until exhausted.

The section is set to be repealed December 1, 2030 (sunset).

What counts as "qualified expenses"

Examples listed (not exhaustive) include costs for:
- Class A fire‑rated roof
- Enclosed eaves
- Fire‑resistant vents
- Minimum six inches of noncombustible vertical clearance at the base of exterior surfaces
- Noncombustible exterior wall covering

Expenses must be paid or incurred in connection with building/installation of these hardening measures on the taxpayer’s primary residence.

Eligibility (who is affected)

Must be an individual whose primary residence (for years claimed) is in a high or very high fire hazard severity zone as identified by the State Fire Marshal (Gov. Code §51178).

Income limits:

$250,000 or less adjusted gross income (AGI) for joint filers, heads of household, and surviving spouses.
$125,000 or less AGI for other individual filers.

Reporting, performance indicators, and confidentiality

Requires the Franchise Tax Board (FTB) to analyze specified performance indicators — number of taxpayers using the credit and average dollar amount claimed — for each taxable year and report to the Legislature by December 1, 2030 (Gov. Code §9795).

The bill treats these disclosure provisions as an exception to Section 19542 (confidentiality).

Fiscal and procedural notes

Digest: Majority vote; Fiscal Committee: yes; No direct appropriation; No local program effect indicated.

The act is a tax levy and would take immediate effect upon enactment. Because the credit applies to taxable years beginning Jan 1, 2025, it would operate retroactively for 2025 tax years if enacted.

Legislative status (selected actions): Introduced Feb 3, 2025; referred to Assembly Revenue & Taxation; amended Apr 7, 2025; re‑referred Apr 8, 2025; in committee May 5, 2025: set/held under submission.

Potential impacts (concise)

Reduces out‑of‑pocket cost for eligible homeowners to perform fire‑hardening measures, encouraging adoption.

Modest per‑taxpayer annual benefit ($400), with up to $2,000 lifetime support.

Likely reduces state tax revenues modestly while targeting households in high fire‑risk zones and within income thresholds.

Bill