The Importance of CalEITC

The Importance of CalEITC

S. E. Williams

Eligible Individuals and Families are Working Individuals and Families


The new California Earned Income Tax Credit provides up to $2,653 to people who qualify and file a state tax return for the 2015 tax year.

The Earned Income Tax Credit (CalEITC) is a cash back state income tax credit designed to put money into the pockets of California’s working poor and many of those with moderate incomes—it is an added financial incentive for eligible families in the state. Another positive aspect of the initiative is that many single individuals may also qualify.

Best of all, if you qualify for the CalEITC you likely qualify for the federal EITC as well and by filing for both, can increase the amount of refund you can get back. You may qualify for the CalEITC if you earned less than $13,870 in 2015.

The cash back tax credit directly supports the legislation’s intention when CalEITC was signed into law by Governor Jerry Brown last June. The initiative was designed to reduce economic hardships for hundreds of thousands of Californians. It will help them meet basic needs and ultimately provide the economic leverage needed to work their way out of poverty.

With the implementation of CalEITC, California hopes to build on the successful legacy established by the Federal Earned Income Tax Credit—long identified as the nation’s most effective tool at reducing economic hardships and child poverty. California’s plan expands on the nation’s success in this area. CalEITC gives more California residents the opportunity to keep more of their earnings while at the same time providing a major work incentive.

In addition to reducing economic hardships among the state’s low and moderate income workers, CalEITC provides other added benefits. For example, it goes a long way toward rebalancing the state’s tax system by reducing the disproportionate share of income paid in state and local taxes by low-income households.

CalEITC is destined to make a difference in the lives of hundreds of thousands of Californians. Because the initiative is modeled after the federal Earned Income Tax Credit (EITC) if the past is truly prologue, California’s working poor will see tangible and meaningful results. According to a report by the California Poverty Measure, which incorporated taxes paid and tax credits received, the federal EITC dollars represented the difference between living in poverty and not living in poverty for about 430,000 adults and 368,000 children in California in 2012. These results can only improve with the implementation of CalEITC.

In 2013–14, 62 percent of federal EITC paid to Californians went to full-time workers; 26 percent went to involuntary part-time workers (those who would rather work full-time); and, 12 another percent went to those who voluntarily work part-time.

For more information regarding California’s Earned Income Tax Credit, including how to file for free, visit

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