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Bill Summary · AB 3

AB 3 — Personal Income Tax: tax credits: fire-resistant home improvements (2024–25)

Status: Died at Desk (2/3/2025)
Introduced: December 2, 2024
Author (as introduced, tax version): Assemblymember Wallis
Classification: Bill (would amend Revenue and Taxation Code)
Notes: Fiscal committee review required; bill declared a tax levy and would take effect immediately if enacted.

Purpose / intent

To encourage wildfire risk reduction by helping homeowners in high-risk fire areas offset the cost of specified home hardening (fire‑resistant) improvements through a state personal income tax credit.

Key provisions

  • Credit amount and term

    • For taxable years beginning on or after January 1, 2025 and before January 1, 2030, a tax credit equal to 40% of a qualified taxpayer’s eligible expenses.
    • Annual limit of $400 per taxpayer; cumulative lifetime limit of $2,000.
    • If the credit exceeds the annual limit or the taxpayer’s “net tax,” unused credit may be carried over to the following year and up to three succeeding years until exhausted.

  • Eligible expenses (examples)

    • Costs paid or incurred for building/installation of home hardening measures to the taxpayer’s primary residence, including, but not limited to:
    • Class A fire‑rated roof
    • Enclosed eaves
    • Fire‑resistant vents
    • At least 6 inches of noncombustible vertical clearance at the bottom of the exterior surface of a building (measured from ground up)

  • Eligible taxpayers

    • Individual whose primary residence is located in a “high” or “very high” fire hazard severity zone as identified by the State Fire Marshal (Gov. Code § 51178).
    • Income limits:
    • Spouses filing jointly, heads of household, and surviving spouses: adjusted gross income (AGI) ≤ $250,000.
    • Other individuals: AGI ≤ $125,000.

  • Reporting and evaluation

    • The Legislature declares the credit’s goal is to compensate homeowners for wildfire mitigation improvements.
    • Performance indicators required: number of taxpayers claiming the credit and average credit amount claimed.
    • Franchise Tax Board (FTB) must analyze the indicators and report findings to the Legislature by December 1, 2030. Certain disclosure provisions are treated as exceptions to Gov. Code § 19542.

  • Sunset/repeal

    • The section would remain in effect only until December 1, 2030, and be repealed on that date.

  • Effective date

    • The bill is a tax levy and would take effect immediately if enacted.

Who would be affected

  • Primary beneficiaries: homeowners with primary residences located in high/very high fire hazard zones who meet the AGI thresholds and undertake qualifying hardening work.
  • Secondary effects: contractors and suppliers providing eligible upgrades; state General Fund revenue (reduced by the cost of credits).
  • Fiscal impact: not quantified in the bill text; subject to fiscal analysis by legislative committees (bill required fiscal committee review).

Procedural / timeline notes

  • Introduced Dec 2, 2024; read and printed; referred to committee. The bill did not advance and was recorded as “Died at Desk” on February 3, 2025.
  • If enacted, the credit would apply for tax years starting 1/1/2025 through 12/31/2029 (subject to the sunset) and the FTB report would be due by Dec 1, 2030.

Potential impacts and considerations

  • Encourages homeowner investment in wildfire mitigation but provides modest per‑year subsidies (max $400/year).
  • Targeted to lower‑ and middle‑income taxpayers in high‑risk zones via AGI limits; homeowners with higher incomes would be ineligible.
  • Budgetary effect depends on take‑up rates and average eligible expense; reporting requirement aims to measure uptake and average benefit.

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

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