Same-Sex Couple Tax Fairness Act Progresses

For immediate release:

Ting legislation would eliminate taxing of health care benefit reimbursements

Sacramento – AB 362, legislation by Assemblymember Philip Y. Ting (D-San Francisco), to provide tax relief for certain same-sex couples who receive employer-sponsored health insurance coverage, passed the Assembly yesterday. The legislation received bipartisan support with a vote of 56 to 19.

“At the heart of this issue is a question of fairness for same-sex couples,” Ting explained to his colleagues in the Assembly.  “The federal policy to tax the health care benefits of same-sex couples and same-sex headed families is discriminatory, and the last thing the state of California should do is endorse that injustice by taxing any reimbursement of those costs.” 

Under existing law, employer sponsored health insurance provided to the partners and children of persons  in same-sex partnerships does not qualify for federal tax exemptions. As a result, same-sex couples incur on average an extra $1,069 in taxes per year.

In response to this excessive tax burden, several California employers have opted to  reimburse these employees for this federal tax expense. However, under California law, these reimbursements are subject to state income taxes. AB 362 would exempt these reimbursements from state taxation.

“California has a rich and proud history of non-discrimination,” Ting added.  “While we can’t change the effects of the Defense of Marriage Act (DOMA) at the state level, it is a matter of principle that California should not benefit from the discrimination same-sex couples face from the federal government.”

DOMA is federal legislation that recognizes marriage only between a man and a woman.  Nationwide, the Human Rights Campaign estimates that 166,000 people receive taxable partner benefits. Equality California, the largest statewide LGBT advocacy organization in California, is the sponsor of the AB 362.

Contact: Carol Chamberlain, 916-319-2019