What SB 1407 does
An act to amend Sections 17132.9 and 17132.10 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
The Personal Income Tax Law, in conformity with federal income tax laws, defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income, including, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, an exclusion from gross income for retirement pay received by a qualified taxpayer, as defined, during the taxable year, not to exceed $20,000, from the federal government for service performed in the uniformed services, as defined, and an exclusion for income annuity payments received by a qualified taxpayer, as defined, not to exceed $20,000, pursuant to a United States Department of Defense Survivor Benefit Plan, as specified. Existing law defines “qualified taxpayer” for the purpose of these exclusions to mean taxpayers that satisfy specified income limitations.
This bill would amend the above-described exclusions to annually adjust the income limitations for taxpayers for inflation, as provided, and to increase the limitation on income eligible for exclusion to $40,000. The bill would also extend the exclusions until taxable years beginning before January 1, 2037.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
Summary from the Legislative Counsel's Digest of the amended senate text, May 14, 2026. Read the full text on leginfo.
How it got here
Senator Archuleta introduced SB 1407 on February 20, 2026, with coauthors Senators Choi and Cervantes and Assembly Members Davies and Jeff Gonzalez. The text was amended 2 times, and heard in 9 committee hearings before its final floor votes.
- Senate Floor, May 28, 2026: 39 ayes, 0 noes.
Committee votes along the way:
- Senate Revenue and Taxation, April 8, 2026: Do pass as amended, but first amend, and re-refer to the Committee on [Military and Veterans Affairs], 5-0.
- Senate Military and Veterans Affairs, April 20, 2026: Do pass, but first be re-referred to the Committee on [Appropriations], 4-0.
- Senate Appropriations, April 27, 2026: Placed on suspense file, 7-0.
- Senate Appropriations, May 14, 2026: Do pass as amended, 7-0.
- Assembly Military and Veterans Affairs, June 16, 2026: Do pass and be re-referred to the Committee on [Revenue and Taxation], 8-0.
- Assembly Revenue and Taxation, June 29, 2026: Do pass and be re-referred to the Committee on [Appropriations], 7-0.
Who supports and opposes SB 1407
The Assembly Revenue and Taxation analysis dated June 26, 2026 lists 12 organizations in support and 1 in opposition. When Senate Revenue and Taxation first listed positions on April 3, 2026, the count was 25 in support and 2 opposed. By the Assembly Revenue and Taxation analysis of June 26, 2026 it was 12 to 1.
In support: Cal Fire Local 2881; California Association of Highway Patrolmen; California State Retirees; California State Treasurer; County of Monterey; Monterey; County of; National University; and 4 more.
Opposed: California Teachers Association.
Read the Assembly Revenue and Taxation analysis.
What happens next
It is in Assembly Appropriations. The last recorded action was on August 13, 2026.
The Governor can sign the bill, veto it, or let it become law without a signature. Until the decision, sign and veto request letters are the remaining channel, and the Department of Finance's enrolled bill report carries weight on anything with a fiscal effect. If signed, most provisions take effect January 1, and implementation moves to the agencies named in the bill.
What it means for aerospace organizations
This is the stage where language still changes. Amendments taken in committee are the ones that reach the Governor, so an organization with a stake in the drafting has a reason to be in that conversation now rather than after the vote.
The aerospace group at Capitol Axis handles that for aerospace clients.
Questions about SB 1407
What does SB 1407 do?
This bill would amend the above-described exclusions to annually adjust the income limitations for taxpayers for inflation, as provided, and to increase the limitation on income eligible for exclusion to $40,000. The bill would also extend the exclusions until taxable years beginning before January 1, 2037.
Has SB 1407 passed the California Legislature?
It is in Assembly Appropriations. The last recorded action was on August 13, 2026.
Who supports and opposes SB 1407?
The Assembly Revenue and Taxation analysis dated June 26, 2026 lists 12 organizations in support and 1 in opposition. Supporters include Cal Fire Local 2881; California Association of Highway Patrolmen; California State Retirees. Opponents include California Teachers Association.
What happens next with SB 1407?
It still has committee and floor votes ahead of it. Amendments taken now are the ones that reach the Governor, so this is the stage where language changes are still possible.