Bill > AB232

This bill introduces a new financial tool called a "catastrophe savings account" to help California homeowners prepare for and recover from natural disasters like wildfires, floods, and earthquakes. The bill allows qualified taxpayers (homeowners) to establish a special savings account where they can contribute up to $15,000 annually if their primary residence is insured, or up to $250,000 if their residence is uninsured. These accounts provide tax benefits, including a deduction for contributions and an exclusion from gross income for interest earned on the account, for taxable years from 2026 to 2031. Funds in these accounts can be used to cover qualified catastrophe expenses, which include costs related to damage from natural disasters declared emergencies by the Governor, as well as property-level mitigation efforts. If a taxpayer uses funds for non-qualifying expenses, they will be subject to a 2.5% penalty. The bill requires the Franchise Tax Board to report annually on the usage of these accounts, tracking metrics like the number of taxpayers using the deduction and the total amount of deductions claimed. The legislation aims to promote financial resilience and personal responsibility in preparing for potential natural disasters by providing a tax-advantaged savings mechanism.

Budget and Finance

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260AB232