California Affordable Childcare Act: Personal Income Tax and Corporation Tax.

Assembly Member Muratsuchi's California Affordable Child Care Act proposes a 0.5% tax on personal and corporate income exceeding $10 million to fund grants for licensed child care facilities. The tax would apply from 2026 through 2031, with exemptions for employers who provide workplace child care or fully reimburse employees' child care expenses.

The legislation establishes the Affordable Childcare Reimbursement Fund to collect and distribute the tax revenue. Starting in fiscal year 2027-28, licensed child care facilities can apply for grants to reduce their service rates or expand capacity by hiring additional staff. The fund operates under continuous appropriation, allowing disbursement of grants independent of the annual budget cycle.

The bill responds to data cited in its findings showing 62% of California children under age 5 have all available parents in the workforce, while typical infant care costs approximately $19,000 annually. Child care workers in the state earn an average of $37,270 per year, and workforce challenges contribute to an estimated $17 billion in annual economic losses statewide. As a tax increase measure, the bill requires a two-thirds vote in both legislative chambers for passage.