Earned Income Tax Credit (EITC)

Rate (Fully Refundable):

• 85% of the federal credit for those earning up to $30,000

Eligibility Requirements: See California’s EITC information page

Latest Legislative Action: In 2020, as part of the state budget bill, California’s EITC was expanded to include taxpayers filing with Individual Taxpayer Identification Numbers who have children age five or younger.

Notes:

• In 2019, as part of the state budget bill, California’s EITC was expanded to include workers making up to $30,000 per year. Previously, the EITC’s income cap was around $24,000.
• In 2018, the California legislature passed a budget for FY2019 that included an expansion of the state’s EITC to workers between the ages of  18 and 24, and older than 65. Previously, California workers younger than 25 were only eligible for the state’s EITC if they had dependent children.
• In 2015, California became the 26th state to enact a state-level EITC after battling numerous budget shortfalls that limited the state’s ability to enact major program initiatives. SB 80 requires that the legislature establish the amount of the credit relative to the federal EITC on a yearly basis through the appropriations process. The 2015-2016 budget set this rate as 85%.
• San Francisco is one of three cities in the country with a local-level EITC, known as the Working Families Credit. Due to limited funding, however, the credit for tax year 2015 is only available to eligible first-time applicants.²

Child Tax Credit (CTC)

Rates (Fully Refundable):

• $337 per dependent, phased out for higher-income taxpayers (see California’s income tax information page for details).

Eligibility Requirements:

• Must quality for the state EITC, with one exception. From 2022 onward, eligible filers are not required to have an earned income and may have a net loss of up to $32,490. (See California’s income tax information page for details)
• All qualifying children must be under the age of six.

Latest Legislative Action: In 2022, as part of a series of state budget bills, eligibility for California’s CTC was expanded to include in-home caregivers without paid work. In the same bill, the tax credit value was adjusted to account for inflation.

Notes:

• The state credit is known as the Young Child Tax Credit (YCTC). 
• In 2023, Assembly Bill 1128 was proposed to expand the tax credit to all eligible state EITC dependents and extend age eligibility to dependents 18 and younger and students 23 and younger. The bill is still in committee.
  
• In 2022, Los Angeles Assemblyman Miguel Santiago proposed Assembly Bill 2589, which would have expanded California’s CTC to provide a one-time $2,000 tax credit per child. The bill died in committee.⁶

Child and Dependent Care Tax Credit (CDCTC)

Rates (Non-Refundable):⁷

• For filers earning up to $40,000: 50% of federal CDCTC
• For filers earning between $40,001 and $70,000: 43% of federal CDCTC
• For filers earning between $70,000 and $100,000: 34% of federal CDCTC

Eligibility Requirements:

• A filer’s Adjusted Gross Income must be less than $100,000
• A filer’s earned income must be greater than total expenses paid for child or dependent care
• See California’s CDCTC information page for more details.

Latest Legislative Action: During the 2016 legislative session, the California House of Representatives considered a bill that would have increased the credit for taxpayers earning less than $70,000 per year but the measure failed to reach the floor for a full vote.

Notes: The state credit is known as the Tax Credit for Child and Dependent Care Expenses