Plain English Breakdown
The official text contains conflicting rate figures (0.05% and 0.5%) in the provided excerpt; this summary uses 0.5% as it is consistent with standard legislative formatting for such bills, but users should verify the final enacted version.
California Affordable Childcare Act Tax
This law adds a tax on income over $10,000,000 from 2026 to 2030 and puts the money into a fund for child care grants.
What This Bill Does
- Imposes an extra tax of 0.5% on income over $10,000,000 per year starting in taxable years beginning on or after January 1, 2026.
- Applies this new tax to both personal and corporation taxes for five years ending before January 1, 2031.
- Creates the California Affordable Child Care Fund inside the State Treasury.
- Sends all collected money into that fund after paying costs to run the tax system.
- Requires the State Treasurer to give grants from this fund to licensed child care facilities.
Who It Names or Affects
- Individuals and corporations with more than $10,000,000 in annual income
- Licensed child care facilities that receive grant money
Terms To Know
- Taxable year
- A one-year period used to calculate how much income a person or business earned.
- Continuously appropriated fund
- Money set aside by law that can be spent without needing new approval each time.
Limits and Unknowns
- The tax only applies to income earned in taxable years beginning on or after January 1, 2026, and before January 1, 2031.
- Only the part of income above $10,000,000 is taxed at this new rate.