Bills

SB 1073: Personal income taxes: earned income credit: credit percentage: phaseout percentage.

  • Session Year: 2015-2016
  • House: Senate
  • Latest Version Date: 2016-09-27
Version:

The Personal Income Tax Law allows various credits against the taxes imposed by that law, including certain credits that are allowed in modified conformity to credits allowed by federal income tax laws. Federal income tax laws allow a refundable earned income tax credit for certain low-income individuals who have earned income from specified sources and who meet certain other requirements.

The Personal Income Tax Law, for taxable years beginning on or after January 1, 2015, in modified conformity with federal income tax laws, allows an earned income credit against personal income tax, and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability, to an eligible individual in an amount determined in accordance with federal law as applicable for federal income tax purposes for the taxable year, multiplied by the earned income tax credit adjustment factor, as specified. Existing law creates the Tax Relief and Refund Account, which is continuously appropriated, and provides that required payments to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account, including amounts allowable as an earned income credit in excess of any tax liability. The Personal Income Tax Law provides that the amount of the credit is calculated as a percentage of the eligible individuals earned income and is phased out above a specified amount as income increases. Under existing law, the credit percentage and the phaseout percentage is based on the number of qualifying children of the eligible individual. Existing law provides, in modified conformity with federal income tax law, in the case of an eligible individual with 3 or more qualifying children, for taxable years beginning before January 1, 2016, the credit percentage and phaseout percentage is 45%, and for taxable years beginning on or after January 1, 2016, the credit percentage and phaseout percentage is the same as for an eligible individual with 2 or more children, which is 40%.

This bill, for taxable years beginning on and after January 1, 2016, would instead provide that, in the case of an eligible individual with 3 or more qualifying children, the credit percentage and phaseout percentage is 45%, thereby increasing the credit percentage and the phaseout percentage for those eligible individuals for taxable years beginning on and after January 1, 2016.

By increasing the allowable credit amount, this bill would authorize new payments from the Tax Relief and Refund Account for additional amounts in excess of personal income tax liabilities, thereby making an appropriation.

Discussed in Hearing

Senate Floor 2MIN
Aug 30, 2016

Senate Floor

Senate Standing Committee on Governance and Finance 11MIN
Aug 29, 2016

Senate Standing Committee on Governance and Finance

Assembly Floor 2MIN
Aug 25, 2016

Assembly Floor

Senate Floor 4MIN
Jun 1, 2016

Senate Floor

Senate Standing Committee on Appropriations 4MIN
May 23, 2016

Senate Standing Committee on Appropriations

View Older Hearings