Personal income tax: Earned Income Tax Credit.

Assembly Member Ahrens proposes substantial changes to California's Earned Income Tax Credit (EITC) program that would establish a minimum credit amount of $355 for eligible individuals whose calculated credit falls below that threshold. The legislation modifies Section 17052 of the Revenue and Taxation Code to create this credit floor beginning in tax year 2025.

The bill implements a graduated phase-out system based on income thresholds that increase over time. For the 2025 tax year, the credit begins phasing out at $15,000 of earned income, rising to $20,000 in 2026 and $28,000 in 2027. Starting in 2028, these thresholds would be adjusted annually using the same method as income tax bracket calculations. The phase-out reduces the credit amount for each $100 of income above the threshold until it reaches zero.

To track the policy's implementation, the Franchise Tax Board must expand its annual EITC reporting to include separate analyses of credit distribution and poverty reduction impacts with and without the new minimum credit provision. The legislation authorizes additional payments from the Tax Relief and Refund Account to fund the increased credit amounts.