AB2186 - Personal Income Tax Law: exclusions: reparations programs.

Enrolled August 24, 2026 Passed IN Senate August 19, 2026 Passed IN Assembly August 20, 2026 Amended IN Senate June 16, 2026 Amended IN Assembly May 18, 2026 Amended IN Assembly March 16, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2186 Introduced by Assembly Member McKinnor (Coauthor: Assembly Member Harabedian) (Coauthor: Senator Grayson) February 19, 2026 An act to add and repeal Section 17139 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST AB 2186, McKinnor. Personal Income Tax Law: exclusions: reparations programs. The Personal Income Tax Law, in modified conformity with federal income tax laws, defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill, for taxable years beginning on or after January 1, 2028, and before January 1, 2033, would exclude from gross income any reparations benefit or payment, as defined, received by a taxpayer during the taxable year. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 17139 is added to the Revenue and Taxation Code, to read: 17139. (a) For taxable years beginning on or after January 1, 2028, and before January 1, 2033, gross income shall not include any reparations benefit or payment received by a taxpayer during the taxable year. (b) For purposes of this section, the following definitions shall apply: (1) “Reparations benefit or payment” means any monetary payment, grant, trust distribution, debt forgiveness, or other financial compensation provided to an individual pursuant to any of the following: (A) A statute enacted by the state establishing a reparations program. (B) A local government ordinance, resolution, settlement, or program establishing a reparations program. (C) A federal statute, regulation, settlement, or federally administered reparations program. (2) “Reparations program” means any federal, state, local, tribal, or territorial government program, commission, task force, or other governmental initiative established to provide monetary compensation, benefits, restitution, rehabilitation, satisfaction, guarantees of nonrepetition, or other forms of redress for past or ongoing harms, discrimination, injustice, or inequitable treatment suffered by a defined group of individuals, including, but not limited to, descendants of enslaved persons, incarcerated persons, or members of a protected class. (c) This section shall remain operative only until December 1, 2033, and as of that date is repealed. SEC. 2. For purposes of complying with Section 41 of the Revenue and Taxation Code, as it relates to Section 17139 of the Revenue and Taxation Code, the Legislature finds and declares the following: (a) The purpose of the exclusion provided by this act is to ensure that reparations payments fulfill their intended purpose by providing meaningful compensation, rather than being partially recaptured and diminished through state income tax. (b) There is no available data to collect or report with respect to the exclusion provided by this act. SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.