(1)TheThe Personal Income Tax Law allows various credits against the taxes imposed by that law, including a young child tax credit to a qualified taxpayer in a specified amount multiplied by the earned income tax credit adjustment factor, as provided. That law also allows a payment from the continuously appropriated Tax Relief and Refund Account for an amount in excess of tax liability. Existing law defines qualified taxpayer for this purpose to include an eligible individual, as defined, who
has a qualifying child, defined to be a child younger than 6 years of age as of the last day of the taxable year, and who meets other specified criteria. Under existing law, the young child tax credit phases out by reducing the amount of the credit by $20 for each $100, or fraction thereof, that the taxpayers earned income, as defined, exceeds a specified amount.
This bill would, bill, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, would instead define a qualifying child to mean a child younger than 18 years of age as of the last day of the taxable year. The bill would establish the Child Tax Credit Expansion Fund in the State Treasury, and continuously appropriate the moneys in that fund to the Franchise Tax
Board, as provided. The bill would also require the Franchise Tax Board, for taxable years beginning on or after January 1, 2024,
2025, and before January 1, 2030, to recalculate the phaseout provisions for the young child tax credit such that the credit reaches $0 as earned income reaches $50,000. The bill would require the Franchise Tax Board to first utilize the moneys in the Child Tax Credit Expansion Fund for the purpose of the above-described expansion of the young child tax credit. By establishing and funding a new continuously appropriated fund, and by increasing the payments from the Tax Relief and Refund Account, a continuously appropriated fund, the bill would make an appropriation.
Existing law requires any bill authorizing a new tax expenditure to contain, among other
things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
(2)The Personal Income Tax Law, in modified conformity with federal income tax laws, allows an earned income tax credit against personal income tax and a payment from the Tax Relief and Refund Account, a continuously appropriated fund, for an allowable credit in excess of tax liability to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law, as determined by the earned income tax credit adjustment factor, as specified. Under existing law, the earned income tax credit phases out for taxpayers that earn over a specified amount and, for taxable years beginning on or after January 1, 2020, the credit reaches $0 when the taxpayers income reaches $30,000, as adjusted. This bill would, for taxable years beginning on or after January 1, 2024, adjust the phaseout of the earned income tax credit so that the credit reaches $0 when the taxpayers income reaches $20,000, as adjusted. The bill would direct that any increase in revenue or savings from this change be deposited into the Child Tax Credit Expansion Fund.(3)The Personal Income Tax Law, in modified conformity with federal income tax laws, provides for the taxation of the gain or loss from the disposition of property. Existing law generally calculates gain for this purpose as the difference of the amount realized from the disposition of property over the adjusted basis of the property, and calculates loss for this purpose as the difference of the adjusted basis of the property over the amount realized from the disposition of the property. Under existing law, where property is received from a decedent, the basis of the property becomes the fair market value of the property as of the date of the decedents death, except as provided.This bill would eliminate the rule that allows the basis of property to automatically become the fair market value of the
property as of the date of a decedents death. The bill would direct that any increase in revenue generated due to this change be deposited into the Child Tax Credit Expansion Fund.(4)Existing law, the Corporation Tax Law, imposes a tax according to or measured by net income, except as provided. Existing law also imposes a minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or
doing business in this state, as specified. Existing law establishes an exception to the minimum franchise tax for corporations that incorporate or qualify to do business for their first taxable year. This bill would, for corporations incorporated or qualifying to do business in the state on or after January 1, 2025, eliminate the exception to the minimum franchise tax for the first taxable year of the corporation. The bill would direct that any increase in revenue generated due to this change be deposited into the Child Tax Credit Expansion Fund.(5)This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature. 
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