Earned Income Tax Credit (EITC)
Rate (Fully Refundable):
- 85% of the federal credit for those earning up to $22,300.1
Eligibility Requirements: See California’s EITC information page
Latest Legislative Action: Lawmakers introduced legislation to increase the tax rate on higher-income corporations operating in the state, and propose to use some of the revenue to fund an expansion of the state’s EITC.
- In 2017, as part of the state budget bill, lawmakers voted to expand the state EITC to include workers making under $24,000 per year. Previously, the EITC’s income cap was around $15,000. The bill is awaiting Gov. Jerry Brown’s signature.
- 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: See California’s income tax information page.
Child and Dependent Care Tax Credit (CDCTC)
- 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
- 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
California Tax Credits In The News