Earned Income Tax Credit (EITC)

Rate (Fully Refundable):

  • 85% of the federal credit up to half of the federal phase-in range for tax year 2015.1

Eligibility Requirements: See California’s EITC information page

Latest Legislative Action:

In 2016, lawmakers are considering AB 1847, a bill that would require all employers to educate their employees who may be eligible about the EITC.

Notes:

  • 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)

Rates (Non-Refundable):3

  • 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

California Tax Credits In The News

9

Jan 17

News Round-up: January 9, 2017

New York Gov. Andrew Cuomo (D) announced his plan to create an Enhanced Middle Class Child Care Tax Credit. The credit, which would supplement the state’s current Child and Dependent Care Tax Credit (CDCTC), would double benefits for the 200,000 families earning $60,000 to $150,000 per year.
Read More

19

Dec 16

News Round-up: December 19, 2016

Arkansas Gov. Asa Hutchinson (R) announced a plan to lower the income tax rate for individuals earning less than $21,000 per year. While many lawmakers praised Gov. Hutchinson’s commitment to helping low-income families make ends meet, some Democratic lawmakers said such households would be better served by a state-level Earned Income Tax Credit (EITC).
Read More
For More State Information:

Chris Hoene
Executive Director
California Budget Project
www.cbp.org
(916) 444-0500
jross@cbp.org

Sources:
  1. SB 80, California State Legislature, 2015
  2. Working Families Credit , City of San Francisco
  3. Child and Dependent Care Expenses Credit, State of California Franchise Tax Board