Personal income tax: credit: durable medical equipment.

The deduction reduction offset was changed from 'the amount of the credit allowed' to 'twice the amount of the credit allowed.' Since the credit equals 50% of the expenditure, this means the full expenditure amount is now deducted from any otherwise allowable deduction, making it much harder to claim both a deduction and the credit for the same expense.

The explicit provision stating 'A taxpayer may claim the credit allowed under this section once per dependent per taxable year' was removed. The $5,000 per qualifying dependent cap effectively accomplishes the same limitation.

The definition of 'complex medical conditions' was simplified by removing the requirement that the condition involve 'ongoing specialized care under the supervision or care of a licensed health care provider.' It now only requires eligibility for early and periodic screening, diagnosis, and treatment (EPSDT) services under Welfare and Institutions Code Section 14132(v).

The definition of 'durable medical equipment' was changed from a descriptive definition referencing Section 1861(n) of the federal Social Security Act to a direct incorporation by reference to Section 1395x(n) of Title 42 of the United States Code (the same provision, just cited differently). The separate requirement that equipment be 'primarily and customarily used to serve a medical purpose' was removed from the definition.

The definition of 'qualified expenditure' was simplified by removing the age and condition requirements (under 18, complex medical conditions) and replacing them with a reference to 'qualifying dependent,' which already contains those requirements. This avoids redundancy but does not change who qualifies.

The bill was reformatted from a printed enrolled document to a web page layout, adding navigation elements (home, accessibility, FAQ, search), version history, and status dates. Page numbers and signature blocks were removed.

A 'Digest Key' section was added showing Vote: MAJORITY, Appropriation: NO, Fiscal Committee: YES, Local Program: NO, which is metadata for the web tracking system rather than a policy change.

The credit cap changed from a flat $5,000 per taxable year to $5,000 per taxable year for each qualifying dependent, meaning families with multiple eligible children can claim a larger total credit.

The definition of 'qualified expenditure' now requires the expense to be 'unreimbursed,' meaning costs already covered by insurance or other reimbursement sources no longer qualify for the credit.

A new defined term 'qualifying dependent' was added, specifying a dependent with one or more complex medical conditions who is younger than 18 as of the first day of the taxable year.

The definition of 'complex medical conditions' now includes a reference to eligibility for early and periodic screening, diagnosis, and treatment (EPSDT) services under Section 14132 of the Welfare and Institutions Code, tying it to an existing state program standard.

A new provision states the credit is in lieu of any other credit the taxpayer may otherwise be allowed under the Revenue and Taxation Code with respect to the same amounts, preventing double-dipping across different tax credits.

New reporting requirements were added: the Franchise Tax Board must submit an annual report to the Legislature starting July 1, 2028, detailing the number of taxpayers claiming the credit and the total dollar amount of credits allowed. This complies with Section 41 tax expenditure disclosure rules.

The amendment to Section 1 of the Revenue and Taxation Code (a nonsubstantive change to the code's citation language) was removed from the bill.

A new section of legislative findings and declarations was added, citing financial hardship data from the Lucile Packard Foundation for Children's Health and stating policy goals around deinstitutionalization and family preservation.

Added an entirely new Section 17052.30 to the Revenue and Taxation Code creating a personal income tax credit for durable medical equipment purchases for children with complex medical conditions. The original bill only made a nonsubstantive fix to Section 1.

The bill now takes effect immediately as a tax levy under Article IV of the California Constitution, rather than being a nonsubstantive amendment with no fiscal impact.

The credit equals 50% of qualified expenditures, capped at $5,000 per taxable year per dependent. Excess credit can be carried forward up to seven additional years.

Eligible taxpayers must have a dependent under age 18 (at the start of the taxable year) with complex medical conditions who has durable medical equipment prescribed by a licensed health care provider. The credit is limited to once per dependent per taxable year.

Defined 'complex medical conditions' as conditions requiring ongoing specialized care under supervision of a licensed health care provider. Defined 'durable medical equipment' by reference to Section 1861(n) of the federal Social Security Act. Defined 'qualified expenditure' as costs for purchasing such equipment for an eligible dependent.

Credit applies to taxable years beginning on or after January 1, 2026, and before January 1, 2031. The section sunsets and is repealed on December 1, 2031.

The Franchise Tax Board is authorized to prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of the new section.