AB 1550

The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions in calculating taxable income and allows a taxpayer to elect to take a standard deduction in lieu of itemizing deductions. Existing federal income tax law, for taxable years beginning before January 1, 2029, allows deductions in determining taxable income, as defined, for amounts equal to the qualified tips, as defined, and qualified overtime compensation, as defined, received by a taxpayer during the taxable year, not to exceed certain amounts, as specified. This bill would, for taxable years beginning on or after January 1, 2026, and before January 1, 2029, conform to federal income tax law with regard to qualified tips and qualified overtime compensation. The bill would, in that regard, allow the above-described deductions to be taken in addition to the standard deduction. 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. This bill would take effect immediately as a tax levy.