Governor Brown recently signed into law the state’s first ever EITC to help California’s poorest working families. The California EITC complements the federal EITC by providing a refundable tax credit for the lowest income California households. The credit will be available beginning with tax returns filed in 2015.
Many of us are already familiar with the federal EITC, which was first enacted in 1975 and is the largest federal tax benefit for families with children. California and twenty-five other states plus the District of Columbia now offer an EITC. In twenty-two of these states, the credit is refundable. Most states set their EITC as a portion of the federal EITC, and most states conform to the federal EITC program in other aspects such as eligibility requirements and income levels.
For California EITC purposes, “earned income” includes W-2 wages, salaries, tips, and other employee compensation, but only if such amounts are subject to California withholding. Unlike the federal EITC, the California EITC will exclude self-employment income from the definition of earned income.
Read the rest of the article at FTB.ca.gov
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- CalEITC4ME
