Personal income taxes: deduction: California qualified tuition program.

Senator Choi's proposal to create tax deductions for California's 529 college savings plan contributions would allow qualified taxpayers to deduct up to $10,000 annually from their state taxable income starting in 2026. The deduction would apply to direct cash contributions to Scholarshare accounts, with maximum amounts varying by filing status - $10,000 for joint filers and heads of household, and $5,000 for other filers.

The measure establishes income eligibility thresholds of $150,000 for joint filers and heads of household, and $75,000 for other filers, with annual inflation adjustments. Contributors must be account owners making deposits on behalf of beneficiaries. The deduction excludes rollovers from other 529 plans or transfers between beneficiaries within Scholarshare accounts. If distributions exceed qualified education expenses, taxpayers must add back previously deducted amounts to their taxable income, unless funds are transferred to another California 529 plan within 60 days.

The Scholarshare Investment Board would track key metrics including the number and dollar value of deductions claimed, new accounts opened, and total contributions. Annual reports to the Legislature starting in 2027 would assess whether the deduction meets its stated aims of expanding college savings participation and reducing student loan reliance. The Franchise Tax Board would implement the deduction through regulations exempt from standard administrative procedures.