Personal income tax: credit: durable medical equipment.

Senator Caballero's proposal to offset the costs of durable medical equipment for children with complex medical conditions would create a new California tax credit covering 50% of qualified purchases, up to $5,000 annually. The credit would apply to equipment prescribed by licensed healthcare providers for dependents under age 18, starting in tax year 2026.

The measure defines eligible durable medical equipment according to federal Social Security Act criteria, requiring items to serve primarily medical purposes for children needing ongoing specialized care. Taxpayers could claim the credit once per qualifying dependent each year, with unused portions available to carry forward for up to seven years. The credit would reduce any related tax deductions by the credited amount to prevent double tax benefits.

The Franchise Tax Board would develop implementation guidelines for the program, which would sunset on December 1, 2031. The credit would take effect immediately upon enactment as a tax levy under the California Constitution, requiring a majority vote for passage but no additional appropriations.