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:

In 2017, California Governor Jerry Brown (D) signed into law a major expansion of the state’s Earned Income Tax Credit (EITC) as part of the state’s 2017-2018 budget.

Notes:

  • 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)

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

18

Sep 17

News Round-Up: September 18, 2017

U.S. Senator Sherrod Brown (D-OH) and Representative Ro Khanna (D-CA) introduced the Grow American Incomes Now (GAIN) Act in the House and Senate, which would double the Earned Income Tax Credit (EITC) for eligible workers, increase the credit for workers without dependent children and lower the qualifying age.
Read More

3

Jul 17

News Round-up: July 3, 2017

Senator Marco Rubio (R-Fla.) and other lawmakers met with Ivanka Trump to discuss expanding the Child Tax Credit (CTC) as part of upcoming tax reform. An administration official has since indicated that the credit will be part of a proposal that the White House's National Economic Council puts forward.
Read More
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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