California has two refundable income tax credits that boost the incomes of people who earn little from their jobs, helping them to afford necessities. These are:
- The California Earned Income Tax Credit (CalEITC) – available to families and individuals with annual earnings under $30,000; and
- The Young Child Tax Credit (YCTC) – available to CalEITC-eligible families with children under age 6.
These credits reduce the amount of state income tax California families and individuals owe based on how much they earn from work and how many qualifying children they live with. Since these credits are refundable, people who qualify for a credit that exceeds the amount of income tax they owe can receive the balance as a tax refund. This means that families and individuals who do not owe any state income tax can get the full credit that they qualify for as a refund.
Two federal refundable income tax credits are also available to families and individuals who earn little from work. These are:
- The federal Earned Income Tax Credit (EITC), which is a refundable credit available to families and individuals with low or moderate earnings from work; and
- The federal Child Tax Credit (CTC), which is a partially refundable credit available to families with children under age 17 who have low, moderate, or high earnings from work.
This updated interactive tool estimates how much people can expect to receive from all four of these credits in tax year 2019 based on their tax filing status, number of children, and annual earnings from work. The additional chart below the interactive shows on a smaller scale the two credits that individuals without children may qualify for – the federal EITC and CalEITC.
Click here to see additional information about these credits and assumptions underlying this interactive tool and chart.
To learn more about the CalEITC and YCTC, including their history and how they compare to other state and federal income tax credits, see this guide: The CalEITC and Young Child Tax Credit: Smart Investments to Broaden Economic Security for Californians.
Note that many immigrant families are excluded from the credits displayed in this interactive. To learn more about this, see Five Reasons Why California Should Extend the CalEITC and Young Child Tax Credit to Immigrant Families and Communities.
Tax filers, spouses, and qualifying children must have Social Security Numbers (SSNs) that are valid for employment in order to qualify for the CalEITC, California’s Young Child Tax Credit, and federal EITC. For the federal Child Tax Credit, qualifying children must have SSNs that are valid for employment, but tax filers and spouses are not subject to the SSN requirement.
In order to qualify for the federal EITC, tax filers who have no qualifying children must be 25 to 64 years old at the end of the tax year (or they must have a spouse who meets this age requirement and they must file a joint tax return). In contrast, California allows tax filers without qualifying children to qualify for the CalEITC if they (or their spouse) are age 18 or older.
The interactive shows credits for families with annual earnings up to $60,000. However, the federal CTC is available to families with incomes above $60,000. For example, people who have one qualifying child can qualify for this credit if they have incomes under $240,000 (if they file as head of household) or $440,000 (if they file as married filing jointly).
The Young Child Tax Credit provides the full $1,000 credit at the first $1 of annual earnings.
For certain families and individuals, the CalEITC, federal EITC, and federal Child Tax Credit are determined based on annual adjusted gross income rather than on annual earnings. For simplicity, this interactive tool and chart assume that a family’s or individual’s annual earnings equal their annual adjusted gross income.
The number of children specified in this interactive tool pertains to “qualifying children,” who must meet certain age, relationship, residency, and other requirements. For example, qualifying children for the CalEITC and federal EITC must be under age 18, while for the federal Child Tax Credit they must be under age 17, and for California’s Young Child Tax Credit they must be under age 6.
The size of the federal Child Tax Credit depends on the number of qualifying children and there is no limit on how many qualifying children can be claimed. For simplicity, this interactive only allows users to select up to three qualifying children.
“Married” refers to tax filers who file joint returns, while “single or head of household” refers to those who file as single, head of household, or qualifying widower. Tax filers whose filing status is “married, filing separately” are not eligible to claim the CalEITC, California’s Young Child Tax Credit, or the federal EITC.
The credits displayed by this interactive tool are rounded to the nearest dollar and may not sum to the total displayed due to rounding. In addition, the credit amounts are estimates and may not match the amounts that families and individuals actually receive. In particular, this tool estimates the state and federal credit amounts based on the exact amount of a family’s or individual’s annual earnings whereas the actual credit amounts people receive are based on the midpoint of $50 increments of earnings. For example, a family with $5,046 in earnings falls within the $5,000 to $5,050 earnings range and their credit amount is based on earnings of $5,025 — the midpoint of this range — rather than on the family’s exact earnings of $5,046.
For additional information about who qualifies for the CalEITC and Young Child Tax Credit, see this information by the Franchise Tax Board.
For additional information about how the CalEITC and Young Child Tax Credit work, see The CalEITC and Young Child Tax Credit: Smart Investments to Broaden Economic Security for Californians.
For additional information about who qualifies for the federal EITC, see this information by the Internal Revenue Service.
For additional information about how the federal EITC works, see Policy Basics: The Earned Income Tax Credit by the Center on Budget and Policy Priorities.
For additional information about who qualifies for the federal Child Tax Credit, see this information by the Internal Revenue Service.
For additional information about how the federal Child Tax Credit works, see Policy Basics: The Child Tax Credit by the Center on Budget and Policy Priorities.