Personal income tax: earned income tax credit.
By authorizing new payments from the continuously appropriated Tax Relief and Refund Account, AB 2387 makes provisions for payments that exceed personal income tax liabilities. This adjustment signifies a shift in focus towards providing greater financial support for low-income individuals, thereby potentially reducing poverty levels among working families in California. The changes are part of a broader strategy to align California's tax code more closely with federal provisions regarding the EITC, which is an important fiscal tool for assisting low-income households in improving their financial stability.
Assembly Bill 2387, introduced by Assembly Member Reyes, amends Section 17052 of the California Revenue and Taxation Code with a focus on the earned income tax credit (EITC). The bill aims to broaden eligibility for the EITC for low-income individuals, allowing those without qualifying children to receive the credit if they are at least 18 years old and under 65. Previously, the age threshold for eligible individuals without qualifying children was set at 25 years, effectively expanding the tax relief provisions to a younger demographic beginning in the 2019 tax year.
The bill may face scrutiny and debate in legislative sessions around its fiscal implications and the effectiveness of the EITC in alleviating poverty. Proponents argue that expanding the eligibility criteria is necessary to provide essential support to those in need, while opponents could highlight concerns regarding the long-term impacts on state revenue and fiscal priorities. Furthermore, the implementation and outreach strategies to ensure eligible individuals are aware of the expanded provisions will be critical in determining the bill's success.
Lastly, the Franchise Tax Board is required to produce an annual report detailing the EITC's impact, including the number of claims, the average credit disbursed, and demographic data of beneficiaries. This reporting requirement aims to ensure accountability and transparency in how the EITC supports Californians, particularly those from disadvantaged backgrounds.