Assembly Members Calderon and Gipson propose creating Catastrophe Savings Accounts, allowing California homeowners to set aside tax-advantaged funds for wildfire, flood, and earthquake-related expenses. The accounts would serve as dedicated reserves for insurance deductibles and uninsured losses when the Governor declares these natural disasters as emergencies.

The legislation establishes specific contribution limits based on insurance status and deductible amounts. Homeowners with insurance deductibles of $1,000 or less may contribute up to $2,000, while those with higher deductibles can save up to $15,000 or twice their deductible amount. Uninsured homeowners may contribute up to $250,000, not exceeding their home's value. The accounts receive two tax benefits from 2025 through 2030: contributions are deductible from adjusted gross income, and interest earned is excluded from gross income.

Account withdrawals must fund qualified catastrophe expenses related to damage or loss of a primary residence. The Department of Financial Protection and Innovation would oversee the accounts and levy penalties for non-qualified withdrawals, with exceptions for homeowners who no longer own primary residences or are over age 70 without insurance. The accounts cannot be subject to attachment, levy, garnishment, or legal process in California.

The Franchise Tax Board must report annually to the Legislature on program participation starting May 2026. The accounts and associated tax benefits expire on January 1, 2030, except for the interest income exclusion which continues through December 1, 2030. The bill would take effect immediately upon enactment.