Personal Income Tax Law: credits: medical expenses.

Assembly Member Jeff Gonzalez's proposal to offset rising healthcare costs would allow California taxpayers to deduct up to $5,000 in out-of-pocket medical expenses annually from their state income taxes between 2025 and 2029. The deduction would apply to medical costs paid directly by taxpayers that are not covered by insurance or otherwise reimbursed.

The measure establishes oversight mechanisms requiring the Franchise Tax Board to track the number of taxpayers claiming the deduction and the average amount deducted. Beginning December 2026, the board must submit annual reports to the Legislature detailing these metrics to evaluate the deduction's utilization. The legislation includes provisions to prevent duplicate tax benefits by reducing other medical expense deductions by the amount claimed under this program.

The deduction would automatically expire on December 1, 2030, unless extended through subsequent legislation. As a tax levy, the measure would take effect immediately upon enactment, allowing eligible taxpayers to begin claiming the deduction starting with the 2025 tax year.