Amended in Assembly May 16, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2676

Introduced by Assembly Member Chávez

February 19, 2016

An act to amend Section 17052.6 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2676, as amended, Chávez. Income taxes: credit: dependent care.

The Personal Income Tax Law, in modified conformity to federal income tax law, authorizes a credit for household and dependent care expenses necessary for gainful employment, as provided. That law provides that the amount of the state credit is a percentage of the allowable federal credit determined on the basis of the amount of federal adjusted gross income earned, as provided.

This bill, for taxable years beginning on or after January 1, 2016, begin insert and before January 1, 2019, end insert would increase the amount of the applicable state credit percentage begin delete and revise adjusted gross income amounts, as provided. end delete begin insert for taxpayers with adjusted gross income amounts of $70,000 or less, as provided. end insert

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 17052.6 of the Revenue and Taxation
Code is amended to read:

17052.6.  

(a) For each taxable year beginning on or after
January 1, 2000, there shall be allowed as a credit against the “net
begin delete tax”, end delete begin insert tax, end insert begin insert ” end insert as defined in Section 17039, an amount determined in
accordance with Section 21 of the Internal Revenue Code, relating
to expenses for household and dependent care services necessary
for gainful employment, except that the amount of the credit shall
be a percentage, as provided in subdivision (b) of the allowable
federal credit without taking into account whether there is a federal
tax liability.

(b) For the purposes of subdivision (a), the percentage of the
allowable federal credit shall be determined as follows:

(1) For taxable years beginning before January 1, 2003:

 

If the adjusted gross income is:	The percentage of credit is:
$40,000 or less	63%
Over $40,000 but not over $70,000	53%
Over $70,000 but not over $100,000	42%
Over $100,000	0%

 

(2) For taxable years beginning on or after January 1, 2003, and
before January 1, 2016:

 

If the adjusted gross income is:	The percentage of credit is:
$40,000 or less	50%
Over $40,000 but not over $70,000	43%
Over $70,000 but not over $100,000	34%
Over $100,000	0%

 

(3) For taxable years beginning on or after January 1, begin delete 2016: end delete

begin insert 2016, and before January 1, 2019: end insert

begin delete

 

If the adjusted gross income is:	The percentage of credit is:
$100,000 or less	200%
Over $100,000 but not over $125,000	100%
Over $125,000 but not over $150,000	50%
Over $150,000	0%
If the adjusted gross income is:	The percentage of credit is:
If the adjusted gross income is:	The percentage of credit is:

 

end delete

 

begin insert

begin insert If the adjusted gross income is: end insert	begin insert The percentage of credit is: end insert
begin insert $40,000 or less    end insert	begin insert 65% end insert
begin insert Over $40,000 but not over $70,000    end insert	begin insert 50% end insert
begin insert Over $70,000 but not over $100,000    end insert	begin insert 34% end insert
begin insert Over $100,000    end insert	begin insert  0% end insert

end insert

 

begin insert

(4) For taxable years beginning on or after January 1, 2019:

end insert

 

begin insert

begin insert If the adjusted gross income is: end insert	begin insert The percentage of credit is: end insert
begin insert $40,000 or less    end insert	begin insert 50% end insert
begin insert Over $40,000 but not over $70,000    end insert	begin insert 43% end insert
begin insert Over $70,000 but not over $100,000    end insert	begin insert 34% end insert
begin insert Over $100,000    end insert	begin insert  0% end insert

end insert

 

(c) For purposes of this section, “adjusted gross income” means
adjusted gross income as computed for purposes of paragraph (2)
of subdivision (h) of Section 17024.5.

(d) The credit authorized by this section shall be limited, as
follows:

(1) Employment-related expenses, within the meaning of Section
21 of the Internal Revenue Code, relating to expenses for household
and dependent care services necessary for gainful employment,
shall be limited to expenses for household services and care
provided in this state.

(2) Earned income, within the meaning of Section 21(d) of the
Internal Revenue Code, relating to earned income limitation, shall
be limited to earned income subject to tax under this part. For
purposes of this paragraph, compensation received by a member
of the begin delete armed forces end delete begin insert Armed Forces end insert for active services as a member
of the begin delete armed forces, end delete begin insert Armed Forces, end insert other than pensions or retired
pay, shall be considered earned income subject to tax under this
part, whether or not the member is domiciled in this state.

(e) For purposes of this section, Section 21(b)(1) of the Internal
Revenue Code, relating to a qualifying individual, is modified to
additionally provide that a child, as defined in Section begin delete 152(c)(3) end delete
begin insert 152(f)(1) end insert of the Internal Revenue Code, relating to begin delete age
requirements, end delete begin insert child defined, end insert shall be treated, for purposes of Section
152 of the Internal Revenue Code, relating to dependent defined,
as applicable for purposes of this section, as receiving over one-half
of his or her support during the calendar year from the parent
having custody for a greater portion of the calendar year, that
parent shall be treated as a “custodial parent,” within the meaning
of Section 152(e) of the Internal Revenue Code, relating to special
rule for divorced parents, etc., as applicable for purposes of this
section, and the child shall be treated as a qualifying individual
under Section 21(b)(1) of the Internal Revenue Code, relating to
qualifying individual, as applicable for purposes of this section, if
both of the following apply:

(1) The child receives over one-half of his or her support during
the calendar year from his or her parents who never married each
other and who lived apart at all times during the last six months
of the calendar year.

(2) The child is in the custody of one or both of his or her parents
for more than one-half of the calendar year.

(f) The amendments to this section made by Section 1.5 of
Chapter 824 of the Statutes of 2002 shall apply only to taxable
years beginning on or after January 1, 2002.

(g) The amendments made to this section by Chapter 14 of the
Statutes of 2011 shall apply to taxable years beginning on or after
January 1, 2011.

SEC. 2.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.