CALIFORNIA — A new bill moving through the California Legislature could provide financial relief to homeowners by allowing a tax deduction for homeowners’ insurance premiums.
The measure, Assembly Bill 1620, would permit taxpayers to deduct the cost of premiums paid on homeowners’ insurance for their primary residence when filing state income taxes.
Homeowners across California face rising insurance costs in wildfire-prone and high-risk areas.
In recent years, insurers have raised premiums or reduced coverage, leaving many residents struggling to afford — or even obtain insurance.
Bill author assemblymember Kate Sanchez said the bill mirrors existing deductions for mortgage interest and property taxes.
“For seniors on fixed incomes, young families trying to hold onto their first home, and middle-class Californians already stretched thin, this relief could make the difference between staying and leaving,” Sanchez said.
Bill would reduce state revenue
If approved, the bill would:
- Allow a state income tax deduction for homeowners’ insurance premiums
- Apply specifically to a taxpayer’s primary residence
- Potentially reduce overall tax liability for eligible homeowners
The Franchise Tax Board estimates the proposal would reduce state revenue by about $110 million in the 2026–27 fiscal year, followed by roughly $70 million annually in subsequent years.
The deduction would apply to tax years from 2026 through 2030 and would expire in 2031 unless extended by lawmakers.
The benefit would be limited to taxpayers who itemize their deductions, excluding those who take the standard deduction.
Benefits higher-income homeowners, critics say
The bill faces opposition from the California Tax Reform Association, which argues the proposal would shift costs onto taxpayers while disproportionately benefiting higher-income homeowners.
In the bill analysis, the group said providing a tax deduction for insurance premiums would effectively subsidize well-off homeowners in high-risk areas. It added that challenges in the insurance market should be addressed within the market itself, rather than through taxpayer-funded relief.
The organization also noted that because California has a progressive income tax system, higher-income homeowners would likely receive a greater share of the benefit.
The measure will continue through the legislative process, where it must clear committees and win approval from both chambers before reaching the governor.
