Personal income taxes: deduction: California qualified tuition program.

Senator Choi's proposal to modify California's tax code would create new deductions for contributions to the state's qualified tuition program, allowing eligible taxpayers to deduct up to $10,000 annually from their gross income starting in 2026. The deduction would apply to direct cash contributions to accounts established under the Golden State Scholarshare Trust Act, with maximum amounts varying by filing status.

The measure establishes income thresholds for eligibility, capping participation at $150,000 adjusted gross income for joint filers and heads of household, and $75,000 for other filers. These limits would adjust annually for inflation beginning in 2027. The bill requires taxpayers to add previously deducted amounts back to their gross income if distributions exceed qualified higher education expenses, unless those funds are transferred to another California qualified tuition program within 60 days.

To monitor implementation, the Scholarshare Investment Board would collect data on deduction claims, account openings, and contribution patterns. The board must survey account holders about their motivations for participating and report findings annually to the Legislature starting July 2027. The Franchise Tax Board would receive authority to adopt implementing regulations outside the standard Administrative Procedure Act process.