SB195 - Income taxes: exclusions: wildfire loss mitigation payments.

Amended IN Assembly August 28, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 195 Introduced by Committee on Budget and Fiscal Review January 23, 2025 An act relating to the Budget Act of 2025. to amend Sections 17138.8 and 24308.10 of the Revenue and Taxation Code, relating to wildfire prevention, and making an appropriation therefor, to take effect immediately, bill related to the budget. LEGISLATIVE COUNSEL'S DIGEST SB 195, as amended, Committee on Budget and Fiscal Review. Budget Act of 2025. Income taxes: exclusions: wildfire loss mitigation payments. Existing law establishes the California Wildfire Mitigation Financial Assistance Program to develop a comprehensive financial assistance program to help property owners, whole communities, and local governments retrofit existing housing, commercial, and public properties in wildfire hazard areas. The Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024, approved by the voters as Proposition 4 at the November 5, 2024, statewide general election, authorizes the issuance of bonds to finance projects for, among other things, wildfire and forest resilience. That act makes $135,000,000 of those bond funds available, upon appropriation by the Legislature, to the Office of Emergency Services to establish a wildfire mitigation grant program to provide loans, rebates, direct assistance, and matching funds for projects that prevent wildfires, increase resilience, maintain existing wildfire risk reduction projects, reduce the risk of wildfires to communities, or increase home or community hardening. The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. Those exclusion include, for taxable years beginning on or after January 1, 2024, and before January 1, 2029, an exclusion for a California qualified wildfire loss mitigation payment, defined as any amount that is received through the California Wildfire Mitigation Financial Assistance Program for the benefit of a residential property owner or occupant with expenses paid or obligations incurred, for wildfire loss mitigation. This bill would extend the tax exclusion provisions to taxable years beginning before January 1, 2031, and would revise the definition of California qualified wildfire loss mitigation payment to mean any grant, rebate, direct assistance, or other financial assistance for wildfire mitigation, home hardening, structure hardening, vegetation management, defensible space, fuel modification activities, or community wildfire resilience through either the California Wildfire Mitigation Financial Assistance Program or the above-described wildfire mitigation grant program established pursuant to the Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals 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. In this regard, the bill would, among other things, require the Office of Emergency Services, no later than December 1, 2031, to submit a report to the Legislature detailing, to the extent data is available, the aggregate amount of funds distributed from the wildfire mitigation grant program and the number of individuals or entities who accepted funds from the program who may be eligible for the above-described income tax exclusions. The bill would appropriate $10,000 from the General Fund to the Office of Emergency Services for the purpose of abiding by those reporting requirements. This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill. This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2025. Digest Key Vote: MAJORITY Appropriation: NO YES Fiscal Committee: NO YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 17138.8 of the Revenue and Taxation Code is amended to read: 17138.8. (a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, 2031, gross income shall not include any amount received by a qualified taxpayer as a California qualified wildfire loss mitigation payment. (b) For purposes of this section, the following definitions apply: (1) “California qualified wildfire loss mitigation payment” means any grant, rebate, direct assistance, or other financial assistance for wildfire mitigation, home hardening, structure hardening, vegetation management, defensible space, fuel modification activities, or community wildfire resilience received through either of the following: (1) (A) “California qualified wildfire loss mitigation payment” means any amount which is received through the The California Wildfire Mitigation Financial Assistance Program under Article 16.5 (commencing with Section 8654.2) of Chapter 7 of Division 1 of Title 2 of the Government Code for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation. Code. (B) A wildfire mitigation grant program under Section 91510 of the Public Resources Code. (2) “Qualified taxpayer” means a taxpayer that owns the structure for which a California qualified wildfire loss mitigation payment was received. (3) “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both. (c) (1) For the purpose of complying with Section 41, as it relates to the tax exclusion provided by this section and Section 24308.10, the Legislature finds and declares the following: (A) The specific goal, purpose, and objective of the tax exclusion is to provide relief to qualifying property owners in high fire areas who participate in the California Wildfire Mitigation Financial Assistance Program pursuant to Section 8654.2 either of the Government Code. following: (i) The California Wildfire Mitigation Financial Assistance Program pursuant to Section 8654.2 of the Government Code. (ii) A wildfire mitigation grant program pursuant to paragraph (4) of subdivision (a) of Section 91510 of the Public Resources Code. (B) The performance indicators for the Legislature to use in determining if the exclusion achieves the stated goal, purpose, and objective shall be the number of qualified taxpayers that may be eligible to exclude qualified amounts from gross income, and the aggregate amount of funds distributed from the California Wildfire Mitigation Financial Assistance Program. Program pursuant to Section 8654.2 of the Government Code and a wildfire mitigation grant program pursuant to paragraph (4) of subdivision (a) of Section 91510 of the Public Resources Code. (2) (A) No later than December 1, 2029, the joint powers authority created pursuant to Section 8654.4 of the Government Code shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the aggregate amount of funds distributed from the California Wildfire Mitigation Financial Assistance Program, and the number of individuals who accepted funds from the program who may be eligible to exclude the income pursuant to this section and Section 24308.10. (B) Notwithstanding Section 19542, the Franchise Tax Board may provide data related to amounts excluded from gross income pursuant to this section and Section 24308.10, requested by the joint powers authority, to the extent that data is available. Taxpayer information received by the joint powers authority pursuant to this section is subject to Section 19542. (3) No later than December 1, 2031, the Office of Emergency Services shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the aggregate amount of funds distributed from a wildfire mitigation grant program pursuant to paragraph (4) of subdivision (a) of Section 91510 of the Public Resources Code and the number of individuals or entities who accepted funds from the program who may be eligible to exclude the income pursuant to this section and Section 24308.10. (d) This section shall remain in effect only until December 1, 2029, 2031, and as of that date is repealed. SEC. 2. Section 24308.10 of the Revenue and Taxation Code is amended to read: 24308.10. (a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, 2031, gross income shall not include any amount received by a qualified taxpayer as a California qualified wildfire loss mitigation payment. (b) For purposes of this section, the following definitions apply: (1) “California qualified wildfire loss mitigation payment” means any grant, rebate, direct assistance, or other financial assistance for wildfire mitigation, home hardening, structure hardening, vegetation management, defensible space, fuel modification activities, or community wildfire resilience received through either of the following: (1) (A) “California qualified wildfire loss mitigation payment” means any amount which is received through the The California Wildfire Mitigation Financial Assistance Program under Article 16.5 (commencing with Section 8654.2) of Chapter 7 of Division 1 of Title 2 of the Government Code for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation. Code. (B) A wildfire mitigation grant program under Section 91510 of the Public Resources Code. (2) “Qualified taxpayer” means a taxpayer that owns the structure for which a California qualified wildfire loss mitigation payment was received. (3) “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both. (c) This section shall remain in effect only until December 1, 2029, 2031, and as of that date is repealed. SEC. 3. The sum of ten thousand dollars ($10,000) is hereby appropriated, from the General Fund to the Office of Emergency Services, for the purpose of abiding by the reporting requirements imposed by this act. SEC. 4. This act is a bill providing for appropriations related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution, has been identified as related to the budget in the Budget Bill, and shall take effect immediately. SECTION 1. It is the intent of the Legislature to enact statutory changes relating to the Budget Act of 2025.