With home insurance bills climbing and options shrinking across California, Assemblywoman Kate Sanchez is pitching a tax break as a pressure valve. Her new bill, AB 1620, would let homeowners deduct what they pay in insurance premiums on their primary residence from their state income taxes starting with the 2026 tax year and running through 2031. Supporters say the move is aimed squarely at seniors and working families who are getting hit hardest by higher premiums and fewer coverage choices. The proposal was introduced in Sacramento and is now parked in the Assembly Revenue and Taxation Committee.
What AB 1620 Would Do
On paper, AB 1620 is simple. It would allow Californians to claim a deduction, when calculating state taxable income, for the amount they pay or incur in a given year on homeowners insurance for their primary residence. The bill is written as a tax levy, which means it is designed to take effect immediately if it becomes law. It also includes the performance benchmarks and data reporting requirements that state law now demands for any new tax expenditure, according to the bill text on the California Legislative Information website.
Cost and Oversight
That break would not be free for the state budget. The Franchise Tax Board's bill analysis estimates California could see about $110 million less in revenue in the 2026–27 fiscal year and roughly $70 million less in each year after that. Those figures assume an average homeowner's premium of $2,000 and roughly 600,000 taxpayers taking the deduction.
The analysis also raises some red flags and housekeeping issues, including the fact that “homeowners' insurance” is not clearly defined in statute and the question of whether lawmakers should limit the deduction by income so it targets those who need it most. The Franchise Tax Board would be on the hook to publish annual usage reports to the Legislature, per the Franchise Tax Board.
Support and Local Impact
Sanchez is pitching AB 1620 as a practical way to keep people in their homes at a time when some are struggling just to hang onto coverage. “Homeowners across California are being pushed to the brink by rising insurance costs,” she said in rolling out the bill.
Her proposal is listed as backed by the California Association of Realtors, the Southern California Rental Housing Association and the Southwest California Legislative Council, according to the Assemblymember's announcement to the Van Nuys News Press. Supporters argue a temporary break on state taxes could help offset the sting of renewal notices for everyone from longtime retirees to landlords trying not to pass costs straight on to tenants.
Why Lawmakers Say It's Needed
AB 1620 is landing in the middle of a multi-year insurance crunch. Major carriers have been scaling back, limiting or outright pausing new policies in parts of the state, while wildfire seasons have driven up claim costs and pushed more homeowners into the state-backed FAIR Plan. The result is a tighter market and steeper premiums for many homeowners.
The Los Angeles Times has tracked both the pullback by private insurers and the surge in FAIR Plan enrollment, trends that backers of AB 1620 cite as a key justification for at least short-term tax relief. They argue that, for vulnerable homeowners in particular, including seniors and lower income households, even a temporary deduction could help blunt some of the damage.
What Happens Next
AB 1620 was introduced on Jan. 22, 2026, and referred to the Assembly Revenue and Taxation Committee on Feb. 2, 2026. That committee will decide whether the bill deserves a spot on the Assembly floor and what changes, if any, it should undergo along the way.
For now, legislative trackers show the proposal still sitting in committee and facing the usual fiscal and procedural checkpoints before any floor vote, according to LegiScan.
Legal And Policy Implications
Because AB 1620 is structured as a tax levy, it would kick in immediately if enacted, and any lost revenue would have to be baked into ongoing budget talks. The Franchise Tax Board suggests lawmakers may want to tighten up which policies qualify or add income phaseouts to better target relief and keep the price tag in check.
That means the committee hearings are likely to focus on a familiar Sacramento balancing act: how much instant relief to offer homeowners wrestling with a shaky insurance market, and how much long term strain the state budget can reasonably absorb.
