SB 674

This bill allows taxpayers to subtract certain theft losses when calculating their income for individual income tax purposes, beginning with taxable year 2024.

Under the bill, a taxpayer may subtract a theft loss if the loss is deductible in the taxable year as an itemized deduction under federal law, regardless of whether the individual claims the federal deduction. Under federal law, the deduction is limited to losses that are related to a profit-seeking activity or connected to a federally declared disaster (or, beginning next year, a state declared disaster). Federal law imposes additional conditions, including that there be no reasonable chance of recovering the money or property, and generally provides that a theft loss is claimed in the year in which the taxpayer discovers the loss.

The bill also provides that taxpayers who make the subtraction under the bill may not include the theft loss in the amount used to claim the itemized deductions tax credit. Under current law, that credit is based on the amount of specified itemized deductions a taxpayer is eligible to claim for federal tax purposes.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.