Plain English Breakdown
The exact start date depends on when funding is first authorized in a Budget Act.
AB-838: Changes to the Renter's Tax Credit
If lawmakers approve funding in a future budget law, this bill would increase renter tax credit amounts and income limits for five years.
What This Bill Does
- Increases the maximum adjusted gross income limit to $150,000 (as adjusted) for joint filers, heads of household, or surviving spouses if funding is approved in a Budget Act bill.
- Sets the new credit amount at $2,000 for eligible couples and families, and $1,000 for single renters, only when specified in a budget law.
- Requires that these changes apply to taxable years beginning on or after January 1 of the year funding is first authorized, plus four succeeding years.
- Makes any part of the new credit larger than the renter's tax owed refundable as cash back from the Tax Relief and Refund Account upon legislative appropriation.
- Directs the Franchise Tax Board to adjust both the income limits and the credit amounts for inflation in taxable years after the first year the increased credit is active.
Who It Names or Affects
- Renters who file joint returns, heads of household, or surviving spouses with adjusted gross incomes up to $150,000 (as adjusted), if funding is approved.
- Single renters with adjusted gross incomes up to $75,000 (as adjusted), if funding is approved.
Terms To Know
- Adjusted Gross Income
- A person's total income minus specific deductions allowed by tax law, which determines eligibility for the credit.
- Budget Act
- The annual state budget bill that must specifically authorize funding for this increased credit to take effect.
- Refundable Credit
- A tax benefit where the government pays back any amount of the credit left over after your taxes are paid in full, provided funds are appropriated by the Legislature.
Limits and Unknowns
- The new credit amounts and income limits only apply if a future Budget Act bill includes funding for them.
- If funding is not approved in a budget law, the existing lower credits ($120 or $60) and lower income limits remain in place for that year.
- Refundable payments are made from the Tax Relief and Refund Account only upon appropriation by the Legislature.