BILL ANALYSIS Ó
AB 2694
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2694 (Lackey) - As Amended May 12, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill increases the Renter's Credit under the Personal
Income Tax (PIT) Law from $120 to $140 for couples filing joint
returns, heads of household, and surviving spouses, and from $60
to $70 for other individuals. These increases will be operative
AB 2694
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for taxable years beginning on or after January 1, 2016, and
before January 1, 2020.
FISCAL EFFECT:
Annual GF revenue loss of approximately $18 million for tax
years 2016 through 2019.
COMMENTS:
1)Purpose. AB 2694 aims to make the California Renter's Credit
more reflective of the current housing market. The Renter's
Credit has not been increased in over 25 years, and renters
are under increasing financial pressure as housing costs rise.
2)Background. The Renter's Credit provides a credit to
low-income taxpayers who rent their primary residence in order
to counteract the inequity between renters and homeowners. The
credit was originally enacted in 1972 as part of a
comprehensive property tax reform program. That program
allowed for an increase in the Homeowner's Property Tax
Exemption Credit that reduces the property tax on
owner-occupied property. In contrast, rental property is not
eligible for the homeowner's exemption. The Renter's Credit
was increased significantly in 1979 shortly after the approval
of Proposition 13 because it was thought that homeowners were
receiving a benefit from Proposition 13, while renters were
not.
Today, the amount of the credit is $60 for single, married
filing separately, and head of household filers with income
not exceeding the California AGI limitation. The credit amount
is $120 for married filing jointly and qualified widower.
AB 2694
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3)Who claims the Renter's Credit? Data for 2012 shows that a
majority Renter's Credit benefits are concentrated among
households with household incomes between $20,000 and $60,000:
Around 80% of allocated credit amounts were given to
households in this income range. The Renter's Credit requires
a taxpayer to have income tax liability, so it does not reach
households with very low incomes.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081