California AB 702

The Personal Income 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. Existing law, in modified conformity with federal income tax law, allows a deduction for specified investment interest, not to exceed the net investment income of the taxpayer for the taxable year, as provided. This bill, for taxable years beginning on or after January 1, 2026, would provide an exclusion from gross income for any amount of interest income that a taxpayer generates on an investment during the taxable year and, without the qualified taxpayer's consent and against the qualified taxpayer's will, is stolen, sold, or otherwise transferred, as specified. This bill would take effect immediately as a tax levy.