Amended in Senate March 23, 2015

Senate Bill No. 268

Introduced by Senator Nguyen

February 19, 2015

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

SB 268, as amended, Nguyen. 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.

This bill, for taxable years beginning on or after January 1, 2015, would increase the amount of employment-related expenses incurred during a taxable year which may be taken into account in determining the amount of the credit from $3,000 to $4,000 if there is one qualifying dependent and from $6,000 to $12,000 if there are 2 or more qualifying dependents.

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
tax”, 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:

 

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%

 

(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 armed forces for active services as a member of the armed
forces, 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)
of the Internal Revenue Code, relating to age requirements, end delete
begin insert 152(f)(1) of the Internal Revenue Code, relating to 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) For taxable years beginning on or after January 1, 2015:

(1) The reference to “$3,000” in Section 21(c)(1) of the Internal
Revenue Code is modified to read “$4,000”.

(2) The reference to “$6,000” in Section 21(c)(2) of the Internal
Revenue Code is modified to read “$12,000”.

(g) 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.

(h) 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.