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Fact Sheet

California Cities Take Lead on Paid Sick Leave, State Law Falls Short

June 2023 | By Hannah Orbach-Mandel

Photo of worried mother taking temperature of her little son who is lying in bed with fever. Mature brown hair mother checking the temperature of her ill 11 years old boy with thermometer on a couch in the living room at home. Sick boy with thermometer laying in bed and mother hand taking temperature. Mother checking temperature of her sick son who has thermometer. Sick child with fever and illness in bed.

Key takeaway

California paid sick leave law is inadequate and leaves many workers vulnerable to going to work while sick or losing their paycheck. California must catch up to other states and provide workers with more paid sick time.

Every California worker deserves to take paid time off to care for themselves and their loved ones when they are sick. While a few California cities offer more generous paid sick leave, the state’s law lags far behind other states (see Table). That leaves many workers in the state with the impossible choice between going to work while sick or losing their paycheck.

“California’s inadequate sick leave laws leave workers with the impossible choice between going to work sick or losing their paycheck.”

California state law only requires employers to provide up to 24 hours of paid sick leave, depending on how many hours the employee worked. That results in many workers —especially those with low wages who are disproportionately women, Black, and Latinx —only having three days of paid sick leave for an entire year.

Some cities in California have recognized the need Californians have for more paid sick time. Seven cities in the state — Oakland, San Francisco, Berkeley, Santa Monica, Emeryville, Los Angeles, and San Diego —  have their own paid sick leave laws that provide workers with more than the state’s 24 hours of paid sick leave.

While these cities have taken an important step in providing workers with necessary benefits so they can adequately care for themselves and their loved ones, it is not enough. Only 17% of Californians are covered by these more generous paid sick leave laws. That leaves 83% of California workers subject to the state’s paid sick leave law, which is inadequate, especially compared to other states. Three days of paid sick leave for an entire year does not allow Californians sufficient time to take care of themselves or their families when they are sick.

COVID-19 demonstrated the critical importance of paid sick leave. Unfortunately, the supplemental paid sick leave put in place during the early days of the pandemic has expired, leaving all workers — especially people of color and workers with low wages — vulnerable to inadequate paid sick leave. Workers need more paid time off when they or their family members are sick. It’s time for California to catch up to these seven cities, as well as other states around the country, and provide workers with more paid sick time.

CityHow Many Hours Must Employees
Be Allowed to Earn?		Applies to Which Employers?
Oakland40 or 72 hoursEmployers with less than 10 workers (40 hours)
Employers with 10+ workers (72 hours)
San Francisco40 or 72 hoursEmployers with less than 10 workers (40 hours)
Employers with 10+ workers (72 hours)
Berkeley 48 or 72 hoursEmployers with less than 25 workers (48 hours)
Employers with 25+ workers (72 hours)
Santa Monica40 or 72 hoursEmployers with less than 26 workers (40 hours)
Employers with 26+ workers (72 hours)
Emeryville48 or 72 hoursEmployers with less than 56 workers (48 hours)
Employers with 56+ workers (72 hours)
Los Angeles48 hoursAll employers
San Diego40 hoursAll employers
California24 hoursAll employers

*Employers may choose to provide more paid sick leave than required by law, but these laws establish a minimum requirement that workers can earn.
Note: Most cities exclude workers from paid sick leave eligibility if they are not eligible for minimum wage in California.
Source: Data from A Better Balance and Budget Center analysis of city paid sick leave laws

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All Californians deserve to be able to care for themselves or their loved ones when they are ill. While California is set to become the world’s fourth-largest economy, the state lags behind when comparing paid sick leave laws across the US (see Table). As a result, many California workers face the impossible decision of going to work while sick or losing their paycheck.

In California, state law mandates that eligible workers can earn up to 24 hours of paid sick leave, depending on how many hours they work. Employers may provide workers with more paid sick time. However, workers with low wages — who are disproportionately women and people of color — are far less likely to have additional employer-provided time off. This means many workers have just three days of paid sick leave for an entire year.

How are workers left behind in California?

Left behind: A father works as a janitor and has a daughter who gets the flu. He needs to stay home and care for her. He has earned the maximum amount of paid sick leave mandated by his state, but his employer doesn’t provide any further leave.

  • In California, he uses up his 24 hours to care for his daughter because she needs to stay home from school for three days. He is now left with zero paid sick leave for the remainder of the year.
  • In Colorado, he has 48 hours of paid sick leave. He uses 24 of those hours to care for his daughter, and has 24 hours left for other illnesses that arise.

Left behind: A grocery store cashier tests positive for COVID-19. She needs to stay home for at least five days. While she worked enough hours to accumulate the maximum amount of leave provided by her state, her employer does not provide additional leave.

  • In California, she uses up her 24 hours in the first three days — leaving her with no sick leave for the rest of the year — and must stay home for two more days, unpaid. She wants to stay home for more than five days to fully recover, but that would mean going even longer without pay or working while sick.
  • In New Mexico, she has 64 hours of paid sick leave. She uses 40 hours for her isolation period, and still has 24 hours remaining to further recover.

COVID-19 demonstrated the critical importance of paid sick leave. Unfortunately, the supplemental paid sick leave put in place during the early days of the pandemic has expired. Workers need more paid time off when they or their family members are sick. It’s time for California to catch up to the states that are leading on this issue.

Paid Sick Leave Policies in Effect in the US, 2023

StateHow Many Hours Employees Must Be Allowed to Earn*Applies to Which Employers?
WashingtonNo cap: 1 hour earned for every 40 hours workedAll employers
New Mexico 64 hoursAll employers
Colorado48 hoursAll employers
Minnesota**48 hoursAll employers
Vermont40 hoursAll employers
New Jersey40 hoursAll employers
New York40 or 56 hoursEmployers with < 100 workers (40 hours)***

Employers with 100+ workers (56 hours)
Oregon40 hoursEmployers with 10+ workers
Massachusetts40 hoursEmployers with 11+ workers
Arizona24 or 40 hoursEmployers with < 15 workers (24 hours)

Employers with 15+ workers (40 hours)
Maryland40 hoursEmployers with 15+ workers
Rhode Island40 hoursEmployers with 18+ workers
Connecticut40 hoursEmployers with 50+ workers
Michigan40 hoursEmployers with 50+ workers
Washington DC3, 5, or 7 daysEmployers with < 25 workers (3 days)

Employers with 25-99 workers (5 days)

Employers with 100+ workers (7 days)
California24 hoursAll employers

* Employers may choose to provide more paid sick leave than required by state law, but these laws establish a minimum requirement that workers can earn.

** This will go into effect on January 1, 2024.

*** For employers with 4 or fewer workers, the requirement to provide at least 40 hours of paid sick leave applies only if the employer’s annual net income exceeded $1 million in the previous tax year.

Source: Data from A Better Balance and Budget Center analysis of state paid sick leave laws

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More than 2.3 million California TK-12 public school students bring a linguistic asset with them to school every day: living in homes where a language other than English is spoken. A majority of these students (1.2 million) demonstrate English proficiency during their school years. But, students’ home language skills are often neglected at school due to California’s shortage of bilingual education teachers. Neglecting students’ language assets means they may not become biliterate, causing them to miss out on numerous advantages biliteracy provides such as cognitive benefits and increased competitiveness once students enter the workplace.

“California must address its shortage of bilingual teachers so that all students have access to an education that prepares them for success.”

To help students achieve biliteracy, California must address its shortage of adequately trained bilingual education teachers. The magnitude of this shortage can be assessed by looking at the number of teachers who have been authorized to teach bilingually in recent years, which pales in comparison to the number of TK-12 students who live in homes where languages other than English are spoken. Specifically, a large imbalance exists between 1) the number of students who live in homes where one of the top 10 languages is spoken and 2) teachers who earned an authorization to teach in those languages from 2012-13 to 2021-22 (See Table).

The bilingual teacher shortage is a significant obstacle for California students to achieve biliteracy. One step the Legislature can take to address this shortage is reinstating the Bilingual Teacher Professional Development Program (BTPDP), which expired in June 2021. Last year, the California Department of Education reported the BTPDP “was very successful and helped address a critical teacher shortage area that is in high demand.” The Legislature should fund the BTPDP and build on its success, especially to help the millions of California TK-12 students with home language assets achieve biliteracy.

Demand for TK-12 Bilingual Education Teachers Outstrips Supply in California

LanguageStudents from Homes Where a Language Other Than English Is SpokenBilingual Authorizations Issued from 2012-13 Through 2021-22Student-to-Bilingual Authorization Ratio
Spanish 1,802,4207,518239.7
Vietnamese68,150302,271.7
Mandarin 67,712436155.3
Cantonese42,08161689.9
Filipino38,45357,690.6
Arabic32,944112,994.9
Korean29,675133223.1
Punjabi22,690211,345.0
Russian21,30737,102.3
Farsi18,55029,275.0

*Note: A bilingual authorization authorizes teachers to deliver instruction in languages other than English and does not include teaching intern credentials, permits, and waivers.

Source: California Department of Education and California Commission on Teacher Credentialing

Support for this report was provided by the Sobrato Family Foundation and the Stuart Foundation.

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All Californians should be able to afford food, yet many struggle to meet this basic need. CalFresh, or SNAP as it’s known federally, provides around 5 million Californians with low incomes monthly benefits to purchase food. Since the beginning of the COVID-19 pandemic, CalFresh benefits were increased with emergency allotments (EA) of federal funds. In January alone, over $521 million additional dollars went out across California to CalFresh recipients. For reference, the total CalFresh issuance was about $1.36 billion in the same month. Emergency allotments accounted for nearly 40% of that amount.

“Raising CalFresh monthly benefits and broadening eligibility could avoid pushing millions of families over the hunger cliff.”

Increased safety net supports, in particular EA, played an important role in reducing child poverty across California in recent years. However, this additional funding came to an end in March, which reduced families’ monthly CalFresh assistance by at least $95, and up to $258 in some cases, amid rising food prices. Already, 1 in 4 families nationwide are reporting increased levels of food insufficiency, according to recent Census data. This figure is on par with states that ended their participation in the EA program before the benefits expired federally. The loss of these additional food benefits is expected to undermine the recent decline in child poverty. With the federal Farm Bill up for reauthorization this year, federal policymakers should  improve benefit adequacy in order to keep up the progress made in recent years. In addition, state leaders should take steps to raise the CalFresh monthly benefits and broaden eligibility to currently excluded Californians to avoid pushing millions of families over the hunger cliff.

Millions of Californians Receiving CalFresh Benefited from Emergency Allotments, January 2023

Congressional DistrictRepresentativePartyEstimated Average Number of Participants, 2022*CalFresh Participants as a Share of the District  PopulationEstimated EA CalFresh Benefits in January 2023**Rank (Highest to Lowest EA Benefit)
CaliforniaN/AN/A4,896,00012.5%$521,115,000N/A
1Doug LaMalfaRepublican119,00015.5%$13,865,0005
2Jared HuffmanDemocratic76,0009.9%$8,949,00034
3Kevin KileyRepublican49,0006.3%$6,716,00048
4Mike ThompsonDemocratic66,0008.7%$8,074,00037
5Tom McClintockRepublican82,00010.6%$11,274,00025
6Ami BeraDemocratic116,00015.4%$11,492,00022
7Doris MatsuiDemocratic117,00015.4%$11,276,00024
8John GaramendiDemocratic89,00011.9%$7,090,00045
9Josh HarderDemocratic107,00013.9%$11,352,00023
10Mark DeSaulnierDemocratic37,0004.9%$6,234,00049
11Nancy PelosiDemocratic80,00011.3%$10,288,00027
12Barbara LeeDemocratic92,00012.5%$7,499,00041
13John DuarteRepublican146,00018.7%$14,458,0004
14Eric SwalwellDemocratic50,0006.7%$7,507,00040
15Kevin MullinDemocratic42,0005.7%$4,404,00052
16Anna EshooDemocratic33,0004.5%$4,755,00051
17Ro KhannaDemocratic35,0004.7%$5,374,00050
18Zoe LofgrenDemocratic89,00012.2%$6,794,00047
19Jimmy PanettaDemocratic50,0006.5%$7,012,00046
20Kevin McCarthyRepublican116,00015.1%$16,011,0003
21Jim CostaDemocratic199,00026.3%$16,958,0001
22David G. ValadaoRepublican188,00023.6%$16,318,0002
23Jay ObernolteRepublican150,00019.7%$11,905,0007
24Salud CarbajalDemocratic69,0009.1%$8,378,00036
25Raul RuizDemocratic149,00019.4%$12,351,0006
26Julia BrownleyDemocratic61,0008.1%$7,273,00042
27Mike GarciaRepublican117,00015.6%$11,639,0009
28Judy ChuDemocratic66,0008.9%$11,613,00011
29Tony CárdenasDemocratic121,00016.4%$11,593,00017
30Adam SchiffDemocratic101,00013.9%$11,608,00012
31Grace NapolitanoDemocratic100,00013.6%$11,593,00017
32Brad ShermanDemocratic69,0009.1%$11,595,00016
33Pete AguilarDemocratic126,00016.5%$11,724,0008
34Jimmy GomezDemocratic137,00018.2%$11,608,00012
35Norma TorresDemocratic95,00012.3%$11,635,00010
36Ted LieuDemocratic44,0006.0%$11,608,00012
37Sydney KamlagerDemocratic165,00021.9%$11,562,00020
38Linda SánchezDemocratic81,00010.9%$11,239,00026
39Mark TakanoDemocratic99,00013.0%$9,561,00029
40Young KimRepublican37,0004.9%$7,562,00039
41Ken CalvertRepublican71,0009.0%$9,629,00028
42Robert GarciaDemocratic121,00016.3%$11,593,00017
43Maxine WatersDemocratic166,00022.5%$11,562,00020
44Nanette BarragánDemocratic116,00015.4%$11,608,00012
45Michelle SteelRepublican84,00011.2%$7,665,00038
46Lou CorreaDemocratic103,00013.6%$7,171,00044
47Katie PorterDemocratic40,0005.3%$7,186,00043
48Darrell IssaRepublican68,0009.1%$9,244,00030
49Mike LevinDemocratic40,0005.3%$8,469,00035
50Scott PetersDemocratic51,0006.8%$9,077,00032
51Sara JacobsDemocratic87,00011.4%$9,065,00033
52Juan VargasDemocratic125,00016.5%$9,101,00031

* Figures are rounded to the nearest 100. Estimates do not sum to total due to rounding and excluded zip code data.

** Figures are rounded to the nearest 1,000. Estimates do not sum to total due to rounding and excluded zip code data.

Note: Values for California reflect the actual number of CalFresh participants from January to December 2022 and the total value of SNAP Emergency Allotment spent in January 2023. District-level estimates are based on zip code-level data for CalFresh recipients in December 2022. About 1% of zip code-level data are excluded due to hidden totals for de-identification purposes and special classifications of zip codes. Therefore, participation for some congressional districts may be underestimated. Data are for individuals receiving federal SNAP benefits and do not reflect individuals receiving state-funded assistance through the California Food Assistance Program.

Source: California Budget & Policy Center analysis of data from the Department of Social Services and US Census Bureau, American Community Survey

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The Supplemental Nutrition Assistance Program (SNAP) — known as CalFresh in California — is the largest federal food assistance program for families with low incomes. On average, nearly 5 million Californians received CalFresh benefits each month in 2022. While CalFresh participation varied across the state, around one-quarter of the population in three congressional districts depended on this program to put food on their tables.

“CalFresh helped nearly 5 million Californians put food on the table each month in 2022.”

CalFresh has been instrumental in recent years in combating poverty and feeding families as the effects of the COVID-19 pandemic continue to be felt throughout the state. This year, the program is due for reauthorization at the federal level, with the Farm Bill set to expire in September. With much of the COVID-19 pandemic relief ending or being rolled back, including SNAP emergency allotments and Pandemic EBT, many CalFresh recipients will see their benefits decrease.1See report by the Center on Budget and Policy Priorities for additional information on temporary pandemic-related SNAP benefits. Food insecurity across California may be exacerbated without this additional support that many families have come to rely on. Federal and state leaders should protect and strengthen CalFresh.

Almost 5 Million Californians Benefited from CalFresh Every Month in 2022

Congressional DistrictRepresentativePartyEstimated Average Number of Participants, 2022*CalFresh Participants as a Share of the District  PopulationRank (Highest to Lowest Percentage)Estimated Annual CalFresh Benefits**
California4,896,00012.5%N/A$14,167,234,000
1Doug LaMalfaRepublican119,00015.5%14$343,478,000
2Jared HuffmanDemocratic76,0009.9%33$219,919,000
3Kevin KileyRepublican49,0006.3%44$140,823,000
4Mike ThompsonDemocratic66,0008.7%39$190,732,000
5Tom McClintockRepublican82,00010.6%32$236,896,000
6Ami BeraDemocratic116,00015.4%17$336,949,000
7Doris MatsuiDemocratic117,00015.4%16$338,716,000
8John GaramendiDemocratic89,00011.9%27$257,694,000
9Josh HarderDemocratic107,00013.9%19$310,064,000
10Mark DeSaulnierDemocratic37,0004.9%50$107,334,000
11Nancy PelosiDemocratic80,00011.3%29$230,125,000
12Barbara LeeDemocratic92,00012.5%24$266,687,000
13John DuarteRepublican146,00018.7%7$423,842,000
14Eric SwalwellDemocratic50,0006.7%42$145,099,000
15Kevin MullinDemocratic42,0005.7%46$122,618,000
16Anna EshooDemocratic33,0004.5%52$96,740,000
17Ro KhannaDemocratic35,0004.7%51$100,676,000
18Zoe LofgrenDemocratic89,00012.2%26$258,159,000
19Jimmy PanettaDemocratic50,0006.5%43$144,907,000
20Kevin McCarthyRepublican116,00015.1%18$334,899,000
21Jim CostaDemocratic199,00026.3%1$575,427,000
22David G. ValadaoRepublican188,00023.6%2$543,496,000
23Jay ObernolteRepublican150,00019.7%5$434,598,000
24Salud CarbajalDemocratic69,0009.1%34$201,017,000
25Raul RuizDemocratic149,00019.4%6$430,416,000
26Julia BrownleyDemocratic61,0008.1%40$176,388,000
27Mike GarciaRepublican117,00015.6%13$338,138,000
28Judy ChuDemocratic66,0008.9%38$190,214,000
29Tony CárdenasDemocratic121,00016.4%11$351,133,000
30Adam SchiffDemocratic101,00013.9%20$293,270,000
31Grace NapolitanoDemocratic100,00013.6%22$290,362,000
32Brad ShermanDemocratic69,0009.1%36$200,042,000
33Pete AguilarDemocratic126,00016.5%9$363,765,000
34Jimmy GomezDemocratic137,00018.2%8$395,248,000
35Norma TorresDemocratic95,00012.3%25$276,276,000
36Ted LieuDemocratic44,0006.0%45$126,011,000
37Sydney KamlagerDemocratic165,00021.9%4$476,158,000
38Linda SánchezDemocratic81,00010.9%31$234,789,000
39Mark TakanoDemocratic99,00013.0%23$287,857,000
40Young KimRepublican37,0004.9%49$106,302,000
41Ken CalvertRepublican71,0009.0%37$204,736,000
42Robert GarciaDemocratic121,00016.3%12$349,609,000
43Maxine WatersDemocratic166,00022.5%3$479,267,000
44Nanette BarragánDemocratic116,00015.4%15$336,596,000
45Michelle SteelRepublican84,00011.2%30$242,049,000
46Lou CorreaDemocratic103,00013.6%21$299,049,000
47Katie PorterDemocratic40,0005.3%48$115,231,000
48Darrell IssaRepublican68,0009.1%35$197,230,000
49Mike LevinDemocratic40,0005.3%47$116,891,000
50Scott PetersDemocratic51,0006.8%41$147,559,000
51Sara JacobsDemocratic87,00011.4%28$252,617,000
52Juan VargasDemocratic125,00016.5%10$361,732,000

* Figures are rounded to the nearest 100. Estimates do not sum to total due to rounding and excluded zip code data.
** Figures are rounded to the nearest 1,000. Estimates do not sum to total due to rounding and excluded zip code data.

Note: Values for California reflect the actual number of CalFresh participants and the total value of CalFresh benefits for January through December. District-level estimates are based on zip code-level data for CalFresh recipients in December 2022. About 1% of zip code-level data are excluded due to hidden totals for de-identification purposes and special classifications of zip codes. Therefore, participation for some congressional districts may be underestimated. Data are for individuals receiving federal SNAP benefits and do not reflect individuals receiving state-funded assistance through the California Food Assistance Program.

Source: California Budget & Policy Center analysis of data from the Department of Social Services and US Census Bureau, American Community Survey

A map showing the estimated CalFresh participation in California in 2022 where the CalFresh program helps feed families in every congressional district.
A map showing the estimated CalFresh participation in the Los Angeles region in 2022 where the CalFresh program helps feed families in every congressional district.
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All California children deserve to grow up in a state that provides their basic needs. CalWORKs is a key part of the California safety net designed to provide families with low incomes financial support to meet their basic needs. However, state policies that reinforce counterproductive federal work requirements limit families’ access to this program. These policies include penalizing CalWORKs parents who are not meeting program requirements by imposing unnecessarily harsh sanctions that reduce their monthly grants.

“To actually help Californians, policymakers must take dedicated steps to reform CalWORKs so that every child and family can thrive.”
A bar chart showing the monthly CalWORKs grant for a single-parent family with two children in 2023 where CalWORKs sanctions push about 60,000 children per month deeper into poverty.

On average, the families of 60,000 children are affected by sanctions each month.1Based on Budget Center analysis of Department of Social Services data for August 2022, the most recent month with available statewide data. For typical CalWORKs single-parent families, sanctions can cut monthly grants by about $120, and a single-parent family with two children can lose up to a maximum of $235 each month. If the family’s grant is reduced by sanctions for an entire year, they can lose up to $2,820 annually — or about one-fifth of the total income they would otherwise receive from CalWORKs to pay for their basic needs.

Research shows that sanctioned recipients are often those who face the most barriers to employment and do not fully understand the sanctions process due to limited education, learning disabilities, or mental health problems.2Rachel Kirzner, TANF Sanctions: Their Impact on Earnings, Employment, and Health (Center for Hunger-Free Communities, Drexel University, March 23, 2015). As California moves to reimagine the CalWORKs program to better support participants, building on recent state reforms including CalWORKs 2.0 and Cal-OAR, and reconsidering the penalty pass-on structure related to the Work Participation Rate (WPR), it must also consider the negative impact of sanctions on families. California should strive to lift families up through its safety net programs by offering support and can take steps to minimize the amount or length of sanctions to reduce harm to families.

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Calling California home means sharing in the responsibility of creating strong communities. Yet, corporations are contributing roughly half as much of their California profits in state taxes than four decades ago. In the early 1980s, corporations that reported profits in California paid more than 9.5% of this income in state corporation taxes. In contrast, corporations paid just 4.8% of their California profits in corporation taxes in 2019, the most recent year data are available. California’s budget would have received $14 billion more revenue in 2019 had corporations paid the same share of their income in taxes that year as they did in 1981 — more than the state spends on the University of California, the California State University, and student aid combined.

“Did you know? California would have received $14 billion more in 2019 had corporations paid their fair share.”

Corporations pay less of their income in taxes today than the 1980s in part due to tax rate reductions by state policymakers. The Legislature has cut the corporate tax rate twice: from 9.6% to 9.3% in 1987 and from 9.3% to 8.84%, its current level, in 1997.

In addition to cutting tax rates, state policymakers have enacted several tax breaks that reduce the share of corporate income paid in California corporation taxes. In the 1980s, policymakers established the “water’s edge” election and the research and development (R&D) tax credit — the state’s two largest corporate tax breaks that account for $6.1 billion of the $7.8 billion the state is projected to spend on corporate tax expenditures in 2021-22.

California’s tax break spending for corporations far exceeds tax benefits for Californians with low incomes. In tax year 2020, California spent $1.3 billion on the state’s two largest tax credits targeted to Californians with low incomes — the California Earned Income Tax Credit (CalEITC) and the Young Child Tax Credit (YCTC).1Reflects credits from tax returns processed by the Franchise Tax Board through November 27, 2021. The CalEITC and YCTC benefited 6.6 million Californians in tax year 2020 by boosting the incomes of those with annual earnings of less than $30,000, a large majority of whom are people of color.2The 6.6 million Californians figure reflects the total number of tax filers, spouses, and dependents in 4.2 million “tax units.” Yet, most people get less than $200 from the CalEITC, far too little to help people earning low wages and living in poverty. Policymakers can make tax credits more equitable by providing a larger minimum CalEITC for eligible workers and pay for it by eliminating or reducing tax breaks for corporations that can afford to contribute more to support California communities.

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  • 1
    Reflects credits from tax returns processed by the Franchise Tax Board through November 27, 2021.
  • 2
    The 6.6 million Californians figure reflects the total number of tax filers, spouses, and dependents in 4.2 million “tax units.”

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California will lose an estimated $69.2 billion in state General Fund revenues in 2021-22 to personal and corporate income tax breaks — or “tax expenditures.”1Department of Finance, Tax Expenditure Report 2021-22, 5, https://www.dof.ca.gov/Forecasting/Economics/Tax_Expenditure_ Reports/documents/2021-22%20Tax%20Expenditure%20Report.pdf. Many of the state’s largest tax breaks primarily benefit higher-income households and businesses, while just a fraction of the state’s tax breaks are targeted to Californians with low and middle incomes.2For a more detailed examination of California’s tax expenditures, see Kayla Kitson, Tax Breaks: California’s $60 Billion Loss (California Budget & Policy Center, January 2020), https://calbudgetcenter.org/resources/tax-breaks-californias-60-billion-loss/. This revenue loss equals approximately one-third of the state’s 2021-22 General Fund budget and represents dollars the state could otherwise use to support Californians to live, work, and thrive across the state.

The state will forgo more than $18 billion in revenue due to just four itemized deductions that mostly benefit higher-income households and three tax incentives for businesses and investors. In comparison, California will spend less than $1.5 billion on tax breaks that primarily benefit low- and middle-income households, including the California Earned Income Tax Credit (CalEITC), the Young Child Tax Credit, the Renter’s Credit, the Student Loan Interest Deduction, and the Child and Dependent Care Credit.

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See our 5Facts: California’s Tax & Revenue System Isn’t Fair for All to learn how elements of California’s tax and revenue system further or impede the goals of economic and racial equity for households, communities, and the state.

Some of California’s tax expenditures also widen racial income and wealth disparities. Since Black and Latinx households are underrepresented in higher-income groups due to legacies of racist policies and ongoing discrimination, these households benefit less than white households from tax breaks skewed toward richer households. Additionally, many tax breaks reward wealth-building activities such as homeownership and retirement savings, to which households of color have less access.

When policymakers choose to spend public dollars via tax expenditures that largely benefit wealthy Californians and businesses, they are also choosing not to spend those dollars to help individuals and families who struggle with the costs of housing, child care, education, and other necessities. Eliminating or scaling back these tax expenditures would free up revenue that could be used to invest in resources that broaden economic security and create wealth and opportunity for more Californians.

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