Personal Income Tax Law: Corporation Tax Law: credits: student loan payments.

Assembly Member Tangipa proposes new tax incentives enabling employers to assist employees with student loan payments through a combination of tax credits and income exclusions. Under the measure, employers could receive credits up to $3,000 annually per qualified full-time employee for student loan payments made on their behalf between 2027 and 2032, with total credits capped at $25 million per year statewide.

The bill establishes eligibility criteria for both employers and employees to participate. Qualified employees must work at least 35 hours weekly or meet full-time salaried requirements, earn no more than $125,000 annually, and be employed for a minimum of six months. For the income exclusion benefit, individual employees must have adjusted gross income under $125,000, or $250,000 for joint filers. Employers cannot be engaged in occupations specified under federal code section 1087e(m)(3)(B).

The Franchise Tax Board, working with the Student Aid Commission, would manage credit reservations with priority given to veteran-owned businesses, disabled-owned businesses, and employers with 500 or fewer employees. Employers must apply during July or within 30 days of their tax year start. The program includes annual legislative reporting requirements on participation rates and credit amounts beginning December 2028. Unused credits may be carried forward for up to four years.