Anti-Poverty Advocates Say Governor’s Budget Must Build on Proven Tools to Address California’s Affordability Crisis
FOR IMMEDIATE RELEASE January 9, 2025
Governor’s Budget Maintains Investments in Anti-Poverty Tax Credits
SACRAMENTO, CA – Prosper California, a leading statewide advocacy coalition dedicated to building economic prosperity and equity for all, commended Governor Gavin Newsom for maintaining investments in anti-poverty tax credits as part of his January state budget proposal for FY 25-26. As California’s poverty rates worsen, advocates say that state leaders must continue to build and strengthen proven tax credit solutions, including the CalEITC, Young Child Tax Credit (YCTC), Foster Youth Tax Credit (FYTC), and the Free Tax Preparation Assistance (FTPA) and Outreach & Education (O&E) program to reduce California’s affordability crisis.
In 2024, investments in the CalEITC delivered over $1.4 billion in refundable tax credits to more than 3.5 million households. Building on the program’s success, advocates say that providing larger state tax credits and increasing its accessibility to more families would help provide critical relief for Californians struggling to afford soaring costs for basic necessities like food, housing, childcare, and gas.
"With nearly 1 in 5 Californians living in poverty, the California EITC program remains a lifeline for many. We commend the Governor’s continued commitment to funding these credits, and urge him to work with the Legislature to fully restore funding for vital free tax preparation and outreach services that help Californians claim their credits and be one step closer to achieving long-term financial stability," said Amy Everitt, President, Golden State Opportunity. “The CalEITC program empowers individuals to invest in their futures, whether that means saving for education, launching a small business, or providing stability for their children - these are essential for the long-term prosperity of our state.”
Californians are counting on the leadership of our Governor and state legislators to expand on tax credit tools proven to help people, families, and communities thrive. Advocates say that state leaders can take action this year to help families afford soaring costs for every day basics and the high costs of housing by expanding the CalEITC minimum to $300 annually and the YCTC to all CalEITC-eligible families and households.
“We are thankful for Governor Newsom’s continued commitment to refundable tax credits that uplift families with low incomes. Unfortunately, child and family poverty in California has risen to new highs,” said Sam Wilkinson, Senior Policy Associate, End Child Poverty in California powered by GRACE. “The state’s anti-poverty tax credits - the CalEITC, YCTC, and FYTC - are proven programs to effectively reduce poverty. We need to bolster these proven tools that close deep racial disparities and provide all families with pathways out of poverty.”
In addition to expanding tax credits, advocates urge state lawmakers to restore $20 million annually for FTPA, O&E, a program that funds local community-based organizations that provide free tax filing services, vital ITIN application and renewal assistance, and connect eligible families to refundable tax credits. Last year, the state budget cut roughly $8 million from FTPA and outreach programs, resulting in decreased services, closure of free tax prep centers, and loss of crucial community resources, impacts that will be felt this tax year.
“Investing in free tax preparation services helps maximize Californians' tax refunds, putting money back in their` pockets to afford rising costs of living and essential needs like housing, food, and childcare. It’s a small investment with a big return for our communities," said Pete Manzo, President & CEO of United Ways of California. “Full restoration of the $20 million for Free Tax Preparation and Outreach & Education programs is essential not only for enhancing the capacity of our on-the-ground partners to ensure that households receive every dollar they are entitled to in their tax refunds but also for bolstering their ability to assist Californians in applying for Individual Tax Identification Numbers (ITINs)."
In 2023, FTPA, and O&E saved Californians an astounding $38 million in paid tax preparer services, and helped more than 110,000 families and households file their state and federal returns and claim their credits for free.
