Millions of Californians are struggling to make ends meet and the affordability crisis continues to drive up the cost of basic necessities like groceries and rent. Simultaneously, the 2025 Republican megabill — H.R.1 — is further straining the budgets of low-income households, by making unprecedented cuts to health care and food assistance, and giving out over a trillion dollars worth of tax breaks to the already wealthy and corporations.
The California Earned Income Tax Credit, the Young Child Tax Credit, and the Foster Youth Tax Credit help millions of Californians afford basic necessities, yet California spends much less on these vital programs than on tax expenditures for profitable corporations.
Specifically, under Governor Gavin Newsom’s budget proposal, the state is estimated to spend almost six times more on tax breaks for corporations than on state tax credits for low-income Californians during the 2026-27 fiscal year.
Expanding refundable tax credits and closing corporate tax breaks are common sense policies as the federal safety net is being weakened and corporations are showered with new federal handouts. Policymakers can support Californians in combating the state’s affordability challenges by closing the “water’s edge” loophole and placing reasonable limits on corporate tax credits and deductions so that no profitable corporation pays next to nothing in corporate taxes.
