All Californians, regardless of their county, race, age, or immigration status should have the support they need to make ends meet and pay for basic necessities. State refundable tax credits — the CalEITC and Young Child Tax Credit — are a key way the state provides economic support to Californians with low incomes. Racism, sexism, socioeconomic discrimination, and inequitable policies have kept millions of Californians in poverty. But research shows refundable tax credits help families and individuals avoid poverty and food hardship, have better health, and experience improved educational achievement and economic security.
California’s refundable credits are specifically targeted to families and individuals with the lowest incomes and available to people who file taxes without regard to immigration status. These credits reach people with earnings from $1 to $30,000 — equivalent to a full-time, minimum-wage salary. Proposals by the governor and Legislature would make children and families without income from employment also eligible to benefit from the state’s child tax credit.
Leaders Can Ensure Tax Credits Deliver the Support Californians with Low Incomes Need
Across all regions of California, millions of children, parents, and working adults are eligible to claim
the CalEITC and the Young Child Tax Credit by filing their taxes. State and local leaders can do
several things to make sure tax credits deliver the support these Californians need to meet their
basic needs and thrive:
- Boosting the size of these credits. For families and for adults without children this is an effective and efficient way to direct flexible resources to Californians who most need support to make ends meet.
- Piggybacking on the CalEITC and Young Child Tax Credit when targeting one-time taxpayer rebates or relief payments. By automatically issuing payments to filers who claim state credits, support can be directed to Californians with low incomes while leveraging existing administrative infrastructure and minimizing red tape for people receiving support.
- Expanding the availability of free tax preparation and filing services. This can help ensure that the full benefit of credits goes to families and individuals, and is not reduced by for-profit tax preparation fees.
How many children, parents, and adult individuals are eligible to benefit from California’s refundable tax credits?
Estimates for each of California’s regions and counties are included in this report.1Estimates are based on simulation of income taxes in public-use microdata from the US Census Bureau, American Community Survey, downloaded from IPUMS USA (University of Minnesota, www.ipums.org), using a tax simulation model developed for the California Poverty Measure, a joint project of the Stanford Center on Poverty & Inequality and the Public Policy Institute of California. Population and income data reflect 2018 and 2019, with CalEITC and Young Child Tax Credit eligibility based on 2019 credit parameters (adjusted for inflation as needed), adding filers who use Individual Taxpayer Identification Numbers (ITINs) to reflect the eligibility expansion implemented in 2020. Note that credit parameters for tax year 2021 are identical to tax year 2019 other than adjustment for inflation for CalEITC. Filers with no earnings who would become eligible for the Young Child Tax Credit under the governor’s and Legislature’s proposals are not included in these estimates. By understanding how many Californians in every county can benefit from these important credits, policymakers and community leaders can invest in proven policies that build on tax credits as tools to help Californians make ends meet and thrive in their communities.
Download the full report above to find out how many Californians are eligible for tax credits in your region.
This project has been made possible in part by a grant from Silicon Valley Community Foundation.