AB 398: Personal income tax: Earned Income Tax Credit.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

The Personal Income Tax Law, in modified conformity with federal income tax laws, allows an earned income tax credit against personal income tax and a payment from the Tax Relief and Refund Account, a continuously appropriated fund, for an allowable credit in excess of tax liability to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law, as determined by the earned income tax credit adjustment factor, as specified. The law provides that the amount of the credit is calculated as a percentage of the eligible individual’s earned income and is phased out above a specified amount as income increases, and provides alternative calculation factors under specified circumstances. Existing law, for taxable years beginning on or after January 1, 2020, and until and including the taxable year in which the minimum wage is set at $15 per hour, requires the phaseout percentage for eligible individuals to be recalculated by the Franchise Tax Board so that the calculated amount of credit for a taxpayer with an earned income of $30,000 is equal to zero.

This bill, for taxable years beginning on or after January 1, 2025, if the amount of credit computed for an eligible individual is less than $355, as specified, would allow the credit for the eligible individual to be $355 instead, except as otherwise specified. By authorizing additional payments from a continuously appropriated account, this bill would make an appropriation.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill also would include additional information required for any bill authorizing a new tax expenditure.

Sponsors

Sponsors by party (alphabetical): Democratic 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. February 2, 2026From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
2. January 31, 2026Died pursuant to Art. IV, Sec. 10(c) of the Constitution.
3. May 23, 2025In committee: Held under submission.
4. May 21, 2025Joint Rule 62(a), file notice suspended. (Page 1627.)
5. May 21, 2025In committee: Set, first hearing. Referred to APPR. suspense file.
6. May 14, 2025In committee: Hearing postponed by committee.
7. April 29, 2025From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 1.) (April 28). Re-referred to Com. on APPR.
8. March 10, 2025In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
9. February 18, 2025Referred to Com. on REV. & TAX.
10. February 5, 2025From printer. May be heard in committee March 7.
11. February 4, 2025Read first time. To print.