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AB 386 would offer employers tax credit for student loan repayment assistance; committee to suspense
Summary
AB 386 would create a refundable credit (up to $3,000 per employee) for employers that make student loan payments for full-time employees, with a $25 million aggregate cap; supporters urged targeted criteria and dialogue with tax agencies; bill referred to the suspense file.
Assemblymember Kevin Tangipa (presenting AB 386) asked the committee to consider a new tax credit that would allow businesses to claim up to $3,000 per full-time employee per year for employer-paid student loan repayments. Tangipa said the program would run starting in 2026 and emphasized the idea as a workforce retention and recruitment tool modeled after a Connecticut program.
Supporters included Patricia Leyva of SHRM California and Fresno State student Carly Hall. Leyva cited research that employers offering education benefits improve retention and workforce upskilling; Hall said the credit could be a deciding factor for graduates choosing to work and stay in California. Tangipa said he was willing to work with members on allocation criteria and administrative details.
The California Tax Reform Association registered respectful opposition on the basis that the bill would generate general fund revenue losses and lacked prioritization criteria for the $25 million cap; the witness argued allocation by "first come, first served" and administrative discretion raised concerns.
Committee members expressed interest in adding allocation criteria and asked the author to work with stakeholders and the Franchise Tax Board on implementation details.
Formal action: AB 386 was referred to the committee's suspense file for fiscal review.
