AB 781 California Assembly · 2025-2026 Regular Session

Charges: health savings accounts: electricity.

Summary

(1) Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission to adopt new, or expand existing, fixed charges, as defined, for the purpose of collecting a reasonable portion of the fixed costs of providing electrical service to residential customers. Under existing law, the commission may authorize fixed charges for any rate schedule applicable to a residential customer account. Existing law requires the commission, no later than July 1, 2024, to authorize a fixed charge for default residential rates on an income-graduated basis, as provided. Existing law requires increases to electrical rates and charges in rate design proceedings to be reasonable and subject to a reasonable phase-in schedule relative to the rates and charges in effect before January 1, 2014. This bill would repeal those provisions relating to fixed charges and rate increases. (2) The Personal Income Tax Law authorizes various deductions in computing income that is subject to tax under that law. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a deduction in computing adjusted gross income in connection with health savings accounts in modified conformity with federal law. In general, the deduction would be an amount equal to the aggregate amount paid in cash during the taxable year by, or on behalf of, an eligible individual, as defined, to a health savings account of that individual, as provided. The bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would also provide related conformity to that federal law with respect to the allowance of rollovers from Archer Medical Savings Accounts, health flexible spending arrangements, or health reimbursement accounts to a health savings account, and penalties in connection therewith.

Bill status failed 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 18, 2025 Last action Feb 2, 2026

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What changed between versions

02/18/25 - Introduced → 03/28/25 - Amended Assembly · 6 edits · Mar 28, 2025

MODERATE

AB 781 was transformed from a one-section intent statement into a comprehensive tax and utility reform bill. The amendment adds the repeal of Public Utilities Code Section 739.9 (which governed fixed charges and rate increase phase-in requirements), a major rewrite of the CARE low-income energy assistance program with new high-usage enforcement thresholds, and a temporary state-level health savings account deduction for taxable years 2026 through 2030.

Scope change

The bill expanded from a single intent statement with no operative effect into a multi-code amendment affecting both the Public Utilities Code (utility rate design, low-income program rules) and the Revenue and Taxation Code (state income tax deductions). It now has direct legal effect on utility rates, CARE program administration, and state tax treatment of health savings accounts.

SCOPE

Section 739.9 of the Public Utilities Code is repealed in its entirety. This removes the commission's authority to adopt or expand fixed charges for residential customers, eliminates the requirement for income-graduated fixed charges (which was due by July 1, 2024), and removes the requirement that rate increases be subject to a reasonable phase-in schedule relative to pre-2014 rates.

ELIGIBILITY

Section 739.1 (CARE program) is substantially rewritten. New provisions allow electrical corporations to require proof of income eligibility when a participant's usage exceeds 400 percent of baseline, mandate participation in energy assessments at that threshold, and permit removal from the program if usage exceeds 600 percent of baseline after an assessment. Rental tenants are protected from removal if the landlord is nonresponsive.

The CARE program is expanded to include nonprofit group living facilities (women's shelters, hospices, homeless shelters) and Homekey housing facilities where residents substantially meet income eligibility requirements.

FISCAL

A new Section 17217 of the Revenue and Taxation Code creates a temporary deduction in computing California adjusted gross income for contributions to health savings accounts. The deduction applies to taxable years beginning on or after January 1, 2026, and before January 1, 2031. It provides modified conformity to federal IRC Section 223, including provisions for rollovers from Archer Medical Savings Accounts, health flexible spending arrangements, and health reimbursement accounts. The section sunsets on December 1, 2031.

TECHNICAL

Sections 17131.4, 17131.5, 17215.1, and 17215.4 of the Revenue and Taxation Code are amended to exclude taxable years 2026 through 2030 from their existing nonconformity provisions, so that federal HSA rules apply during the temporary deduction period.

Sections 2827.1 and 2851 of the Public Utilities Code receive conforming edits to remove references to the repealed Section 739.9 and make minor grammatical corrections.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Feb 2, 2026

Lower · Passed

From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

lower

Apr 21, 2025

Lower · Passed

In committee: Set, first hearing. Hearing canceled at the request of author.

lower

Apr 1, 2025

Committee

Re-referred to Com. on REV. & TAX.

lower

Mar 28, 2025

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.

lower

Mar 28, 2025

Committee

Referred to Coms. on REV. & TAX. and U. & E.

lower

Feb 19, 2025

Lower · Passed

From printer. May be heard in committee March 21.

lower

1 primary · 0 co-sponsors