Personal Income Tax Law: young child tax credit.
In addition to redefining qualifying criteria, AB 2977 establishes the Child Tax Credit Expansion Fund. This fund will ensure that any revenue generated from the adjustments to tax law, such as the elimination of the rule that allows property basis changes after a decedent's death, is directed toward the expansion of the young child tax credit. Such measures are expected to ease economic burdens on families, thereby contributing to family sustainability and wellbeing, particularly during crucial developmental years.
Assembly Bill 2977, introduced by Assembly Member Jackson, aims to amend the Personal Income Tax Law to expand the young child tax credit. The bill proposes to redefine 'qualified taxpayer' to include individuals with qualifying children up to the age of 18, thereby removing the previous age limit of six. This change is designed to provide broader financial relief to working families over the next several years, specifically from 2025 to 2030, allowing for a more considerable tax benefit as families grow and encounter rising expenses related to children.
The sentiment surrounding the bill appears largely positive among supporters, who argue that it addresses significant issues of child poverty and supports families effectively. Advocates believe this expanded credit could lead to enhanced financial stability for families across California, thus supporting community wellbeing and economic vitality. However, there are concerns from some lawmakers regarding the long-term implications of increased tax expenditures and whether expanding tax credits in this manner could lead to budgetary constraints in other areas.
Notable points of contention arise from the expected effects of this expanded tax credit. Some legislators question whether the current tax structure can accommodate increased expenditures for tax credits and worry about potential revenue losses. The requirement for legislative approval of any new tax expenditures further emphasizes the need for a careful evaluation of the fiscal impacts this bill may have on state finances. The criticism also revolves around the approach of broadening tax benefits without addressing the sustainability of state revenue streams.