Expand the Earned Income Tax Credit

The California Earned Income Tax Credit (CalEITC), enacted by the Legislature and the Governor in 2015, provides much-needed assistance to working families and individuals who are struggling to make ends meet. The CalEITC is a cash back tax credit that puts money back into the pockets of California's low-income working families and individuals. The CalEITC has long-lasting benefits for children, families, and communities. More than 30 organizations across California strongly recommend the following actions for the 2017-18 state budget to strengthen and expand the CalEITC:

  1. Invest in outreach and free tax preparation services so more eligible families receive their credits.
  2. Enable all self-employed workers meeting the income eligibility requirements to benefit.
  3. Increase the CalEITC income eligibility threshold to reach all households eligible for the federal EITC.
Background

The CalEITC is a refundable state tax credit that increases the economic security of working families. The credit is currently available to households with annual earnings below $6,717 for an adult without qualifying children, $10,087 for a family with one qualifying child or $14,161 for a family with two or more qualifying children. In its first year, more than 815,000 people benefited from the credit. The CalEITC primarily benefits working families with children, who can receive as much as $2,706 from the CalEITC, in addition to the income boost they receive from the federal EITC.

In 2016, families with children received an average of around $830 from the CalEITC. The CalEITC is making a meaningful impact on families in deep poverty: many families used the credit to pay for food, rent, childcare and other basic needs, or one-time expenses such as a car repair to enable them to get to work.

The CalEITC reduces deep poverty by building on the federal EITC, which is the nation's largest and most successful anti-poverty program. According to the Franchise Tax Board, the CalEITC lifts 23,000 California families out of deep poverty. Additionally, the CalEITC improves child and maternal health outcomes, increases education success through higher test scores, graduation rates and college attendance rates, spurs local economic growth and builds long-term economic security.

In the 2015-16, the Legislature's budget bill indicated their intent to expand the CalEITC "to include a broader section of working poor Californians." Building on the success of the credit in its first year, the CalEITC should be strengthened and expanded to maximize its success as a poverty-fighting tool, work incentive, and driver of economic activity.

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Our Partners

The Children's Defense Fund – California is joined by the United Ways of California and 29 additional organizations in calling for the expansion and strengthening of the CalEITC in the 2017-18 state budget.

  • Alameda County Community Food Bank
  • American Academy of Pediatrics – California Chapter
  • California Asset Building Coalition
  • California Association of Food Banks
  • California Association of Public Authorities (CAPA)
  • Children's Defense Fund – California
  • Golden State Opportunity
  • GRACE
  • Jewish Family Service of Los Angeles
  • Los Angeles Alliance for a New Economy
  • National Association of Social Workers
  • Parent Voices SF Chapter
  • California Association of Micro Enterprise Opportunities
  • Children Now
  • California Immigrant Policy Center
  • California Partnership
  • California Pan-Ethnic Health Network
  • California Welfare Directors Association
  • CFED – Expanding Economic Opportunity
  • Equality California
  • Friends Committee on Legislation of California
  • PolicyLink
  • REDF
  • SEIU California
  • Small Business California
  • Small Business Majority
  • The Children's Partnership
  • United Ways of California
  • Vermont Village Community Development Corporation
  • Western Center on Law & Poverty
  • Youth Policy Institute
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