Personal income taxes: household and dependent care services.
The modifications brought by SB 1213 intend to lower the financial burden related to child and dependent care for working families, thereby promoting workforce participation. Notably, the bill introduces a provision for taxpayers whose allowable credits exceed their tax liabilities, mandating payments from the Tax Relief and Refund Account equal to the allowable credit beyond their tax obligation. This provision is expected to facilitate additional cash flow for families needing financial assistance for childcare services, reflecting a commitment to support working individuals and families regardless of their tax liabilities.
Senate Bill No. 1213, introduced by Senator Anderson, seeks to amend Section 17052.6 of the Revenue and Taxation Code in California. The bill proposes changes to the personal income tax credit for household and dependent care services necessary for gainful employment. This amendment aims to enhance financial support for low-income taxpayers by revising the applicable credit percentages based on the federal adjusted gross income, especially targeting those earning up to $100,000. For taxable years beginning on or after January 1, 2019, the bill guarantees a 50% state credit on allowable federal credits for those within this income threshold.
There may be varied opinions surrounding the bill, particularly regarding the sustainability of the Tax Relief and Refund Account from which excess credits will be paid out. Critics might argue about the long-term implications of funding such credits and whether it could lead to adjustments in state revenue projections. Furthermore, while the bill aims to provide relief, some may call for more comprehensive reforms that address the root causes of economic disparity in family households, potentially arguing for more expansive eligible services or credits.