2020 Expansion of California Earned Income Tax Credit, including newly-signed AB 1876, makes 600,000 more Californians, including 200,000 children, eligible for critical cash assistance
Expanded access to California Earned Income Tax Credit will bolster immigrant families facing COVID-19 induced recession and boost economic growth
In 2020, over $1 billion has gone back into the pockets of more than 3.6 million Californians and their families, through the expanded California Earned Income Tax Credit and Young Child Tax Credit
SACRAMENTO – Governor Gavin Newsom today signed AB 1876, further expanding access to the California Earned Income Tax Credit (CalEITC) to ensure all California tax filers, specifically undocumented ITIN filers who are otherwise eligible, may qualify for the CalEITC and the Young Child Tax Credit (YCTC). In 2019, the Administration more than doubled the CalEITC and the YCTC from $400 million to $1 billion and in the 2020-21 State Budget, expanded eligibility to undocumented ITIN filers with children five and under. An estimated two in three of eligible workers under this new expansion are essential workers – including workers in restaurants, grocery stores and the farm industry.
“The COVID-19 pandemic has hit California families hard – especially families of color who were already disproportionately impacted by the ongoing affordability crisis. Undocumented front line workers leave their families every day to keep our economy running, but many are still struggling to make ends meet,” said Governor Newsom. “Expanding the CalEITC will provide a critical boost to undocumented and mixed-status families across the state, stimulate the economy and make us all stronger in the face of economic uncertainty. These Californians are taxpayers and should be treated like taxpayers, eligible for the same credits, and pay the same tax rates.”
The COVID-19 recession has not only dealt a swift and broad-based blow to California’s economy – it has taken a disproportionate toll on low-income Californians of color, worsening income disparities that predate the pandemic. In the first two months of the COVID-19 recession, the majority of jobs lost were in low-paying industries. An estimated 289,059 undocumented Californians lost their jobs due to the pandemic. Among those most severely impacted, immigrant women have lost their jobs at a disproportionate rate.
The expansion of the CalEITC and the creation of the YCTC have provided much-needed financial relief to millions of Californians, especially families with young children. Additionally, on April 15, 2020, Governor Newsom announced a first-in-the-nation statewide public-private partnership to provide disaster relief assistance for undocumented Californians. California’s $75 million investment reached 150,000 people across the state and the privately funded Immigrant Resilience Fund, managed by Grantmakers Concerned with Immigrants and Refugees (GCIR), has brought in over $42 million of the $50 million goal to date, and has disbursed $37.4 million to eight regions.
AB 1876, a budget trailer bill, removes the requirement for an ITIN tax filer to have at least one child under the age of six to qualify for the CalEITC. The requirement will no longer apply in each taxable year beginning on or after January 1, 2020. 97 percent of children who will benefit are children of color, and 90 percent are Latino. Today’s step to build a more equitable CalEITC comes as California celebrates Latino Heritage Month and the 15 million Latinos who call California home – a diverse group with roots throughout Latin America and beyond, Latino Californians also trace their heritage to the original Indigenous communities of Latin America and Africa.
“The CalEITC is a powerful tool to help uplift hardworking families across this state,” said First Partner Jennifer Siebel Newsom. “I am proud the Governor is signing this critical piece of legislation to ensure this transformative benefit reaches even more families.”
“We know that immigrant workers have been disproportionately devastated by our current public health and economic crises. These tax-paying, essential workers continue to be shamefully and systematically left out of federal relief efforts,” said Assemblymember Lorena Gonzalez (D-San Diego), Chair of the California Latino Legislative Caucus. “Today’s signing of AB 1876 reflects our inclusive California values and provides tax equity to all our residents, including tax-filing undocumented workers. For years, the Latino Caucus has been fighting for this expansion of the California Earned Income Tax Credit to ITIN filers as it provides a critical safety-net for our lowest paid working families. We thank Governor Newsom for seeing these essential workers in their entirety, for the human beings and full California residents that they are.”
“The United Way has called the EITC a widely recognized and effective anti-poverty program for pro-working families. Immigrants in California are the backbone of our economy. The decision to expand the Cal Earned Income Tax Credit to include all ITIN filers is good policy for California families. This is a step in the direction to create a stronger safety net in California for all our residents, regardless of immigration status. I appreciate Senate Pro Tem Atkins’ support on this issue,” said Senator Maria Elena Durazo (D-Los Angeles), Vice Chair of the California Latino Legislative Caucus.
“The CalEITC is a proven tool to help fight poverty by providing economic stimulus directly to working individuals and families that spurs localized economic activity, yet it has historically left out 600,000 taxpaying immigrants, including 200,000 children from the benefits of this program,” said Assemblymember Eloise Gomez Reyes (D-San Bernardino). “Today, we bring inclusion and equity to this program by providing an opportunity to our immigrant communities to claim this tax credit as they are not able to claim other forms of federal relief and are disproportionately impacted by the COVID-19 pandemic. They are more likely to work jobs that do not allow physical distancing, remote work, or other safety measures. Thank you to Governor Newsom for signing this bill that was prioritized by Speaker Rendon and the Legislative Latino Caucus.”
“Our immigrant communities have been hit especially hard by the pandemic and are left out of many social safety net programs. Expanding the earned income tax credit to ITIN filers will open up access to desperately needed assistance. I am grateful to my colleagues and the Governor for lifting up all Californians,” said Assemblymember David Chiu (D-San Francisco), Chair of the API Legislative Caucus.
Last year, Governor Newsom significantly expanded the CalEITC beginning in tax year 2019, by more than doubling the existing credit from $400 million to $1 billion. The expanded program extended credits to over 1 million additional households, raising the number of households receiving the credit to 3.6 million. The expanded credit includes a $1,000 credit for every family that otherwise qualifies for the credit and has at least one child under the age of six.
This year’s Budget continues the CalEITC at this expanded level and extends the CalEITC to undocumented Californians who file using an ITIN and have at least one child under the age of six. This expansion and AB 1876 allow more families to receive additional help to address the costs of food, rent and other basic necessities.