Personal income tax: credit: durable medical equipment.

Senator Caballero's proposal would create a new personal income tax credit in California covering half of unreimbursed costs for durable medical equipment purchased for children with complex medical conditions. The credit would apply to qualifying expenses incurred between January 2026 and December 2031, with a maximum annual benefit of $5,000 per eligible dependent under age 18.

The measure defines qualifying medical equipment according to federal Medicare standards and requires prescriptions from licensed healthcare providers. Taxpayers could carry forward unused portions of the credit for up to seven years. The bill's findings cite data from the Lucile Packard Foundation for Children's Health indicating that California families caring for children with special health needs face disproportionate financial pressures, particularly when insurance coverage for essential equipment is denied or requires upfront payment.

To monitor implementation, the Franchise Tax Board would submit annual reports to the Legislature beginning July 2028 detailing the number of credits claimed and total amount distributed. The reports would help lawmakers evaluate whether the program meets its stated goal of reducing out-of-pocket costs that can otherwise lead to delayed care or institutional placement. The credit would expire December 1, 2031 unless extended by future legislation.