Advocates Say California Must Show the Nation the Power of Direct Cash Assistance to Address Affordability Crisis
FOR IMMEDIATE RELEASE March 10, 2025
SACRAMENTO, CA — Today, anti-poverty advocates with Prosper California touted AB 397 (M. González) and AB 398 (Ahrens) as vital opportunities to help families with low incomes meet the soaring cost of living in the Golden State and showcase California’s commitment to lifting people and families out of poverty even as Congress considers devastating cuts to the safety net. Amid soaring poverty rates and increasing costs of living, advocates say that Californians struggling to pay the bills are demanding relief to pay the bills by building on a solution that works: direct cash assistance.
AB 397 proposes to strengthen the California Earned Income Tax Credit (CalEITC) by increasing the minimum tax credit from $1 to $300. While eligible Californians can receive up to $3,644 in cash back annually, 81% of claimants receive less than $300, and 33% receive less than $100. Increasing the CalEITC minimum will provide tax filers with a more meaningful credit and encourage more Californians to file their taxes to claim their credits. AB 398 seeks to expand the Young Child Tax Credit (YCTC) to all children, regardless of their age, providing up to $1,154 to help families make ends meet. Advocates say these tax credit proposals build on the past decade of progress California has made to reduce poverty and help families meet the rising cost of basic necessities.
“We appreciate California state leader’s decade-long commitment to California’s anti-poverty tax credits. The CalEITC, YCTC and FYTC effectively reduce poverty, supporting many folks who are ineligible to receive federal tax credits or other public benefits,” said Sam Wilkinson, Senior Policy Associate, GRACE - End Child Poverty CA. “When it comes to addressing poverty, we know what works - investing in families. AB 397 and AB 398 do just that. We look forward to working with the Legislature to move these proposals into reality, meeting Californians where they’re at and helping address the rising cost of living.”
State leaders have made significant progress to address poverty over the past decade by building and strengthening refundable tax credits that deliver more than $1.4 billion to 3.5 million families and individuals in just the last year alone. Despite this progress, millions of Californians are still struggling to make ends meet. United Ways of California’s Real Cost Measure study finds that one in three California households (over 3.7 million) do not earn enough to afford a decent standard of living. Meanwhile, new federal threats to safety net programs are currently being considered as part of the federal budget process. Food assistance, child care subsidies, healthcare, and housing support are all on the chopping block, threatening to make it even harder for families with low incomes to afford basic necessities.
“State leaders have an opportunity to continue standing together with working families and show the nation a path to prosperity,” said Pete Manzo, President & CEO, United Ways of California. “Strengthening and expanding these successful tax credits are one the most effective ways state policymakers can provide immediate relief for families. We look forward to working with committee members to secure their yes vote.”
While both measures were placed on the suspense file, anti-poverty advocates say there’s too much at stake and state policymakers must take urgent action.
"Moving AB 397 and AB 398 to the suspense file is a routine step for legislation with significant fiscal implications," said Amy Everitt, President, Golden State Opportunity. "GSO along with our Prosper CA partners remain fully committed to advocating for its passage and ensuring lawmakers recognize the critical impact this bill would have on working Californians. Our work doesn’t stop here—we’ll continue collaborating with stakeholders to push this bill forward and secure the support it needs."