Relating to: income tax credit for in vitro fertilization medical expenses. (FE)

2025-2026 Regular Session Introduced by Bob Donovan and 7 co-sponsors

Excludes from California gross income any investment interest that was stolen or transferred without consent, for tax years beginning 2026; no deduction allowed.

Fiscal estimate received

AB 702 — Summary

Note on document inconsistency
- The bill title provided (an income tax credit for in vitro fertilization expenses) does not match the bill text and legislative counsel digest. The actual legislative text and digest for AB 702 (as introduced Feb 14, 2025) address a personal income tax exclusion for interest income that is stolen, sold, or otherwise transferred without the taxpayer’s consent. This summary describes the text and intent reflected in the legislative counsel’s digest and bill language.

Purpose

To exclude from California gross income interest income that a taxpayer generated on an investment during the taxable year but that was stolen, sold, or otherwise transferred without the taxpayer’s consent and against the taxpayer’s will. The intent is to prevent victims of theft or unauthorized transfer of investment interest from being taxed on interest they no longer possess or control.

Key provisions

Adds Section 17133.2 to the Revenue and Taxation Code.

For taxable years beginning on or after January 1, 2026, gross income shall not include any amount of “qualified investment interest income” generated by a taxpayer during the taxable year if that interest income was, without the taxpayer’s consent and against the taxpayer’s will, stolen, sold, or otherwise transferred so it is no longer under the taxpayer’s possession or control.

A taxpayer may not take a deduction for any amount excluded from income under this section.

The act is declared a tax levy and takes immediate effect upon enactment.

Who is affected

Individual taxpayers who generate interest income from investments and then experience theft, unauthorized sale, or other nonconsensual transfer of that interest during the taxable year.

State tax administration (Franchise Tax Board) and potentially state finances, since excluded amounts reduce taxable income reported to the state.

Effective date and procedural notes

Applicability: taxable years beginning on or after January 1, 2026.

Immediate effect clause: labeled a tax levy under Article IV of the California Constitution, so it takes effect upon enactment.

Fiscal committee review: the digest indicates referral to a fiscal committee (fiscal committee: YES), although no appropriation is created.

Potential impacts and implementation issues

Tax relief for victims of theft or unauthorized transfers of investment interest by allowing exclusion of such interest from gross income.

Potential revenue loss to the state (not quantified in this text); fiscal analysis would be required.

The bill’s text does not specify evidentiary standards, documentation, or procedures for proving theft/unauthorized transfer or for handling later recovery of excluded amounts; administrative guidance or implementing regulations may be necessary.

Legislative status (as of documents provided)

Read first time and referred to Committee on Revenue & Taxation (committee hearings were scheduled, postponed, and later a hearing was canceled at the author’s request).

Also listed as read first time and referred to Committee on State Affairs in a later entry; legislative docket shows multiple committee actions in early 2025.