A new law signed by Gov. Gavin Newsom on Friday allows more undocumented immigrants to receive a state tax credit worth hundreds of dollars.
The change is meant to put money in the pockets of low-income households regardless of immigration status during the recession brought on by the coronavirus outbreak. California is the only state offering the so-called Earned Income Tax Credit to undocumented residents.
Newsom said in a written statement that the tax credit expansion would provide a “critical boost” to undocumented and mixed-status families in California.
“The COVID-19 pandemic has hit California families hard – especially families of color who were already disproportionately impacted by the ongoing affordability crisis. Undocumented front line workers leave their families every day to keep our economy running, but many are still struggling to make ends meet,” he said. “These Californians are taxpayers and should be treated like taxpayers, eligible for the same credits, and pay the same tax rates.”
The law expands previous legislation, signed by Newsom in June, that allowed undocumented residents for the first time to qualify for the California Earned Income Tax Credit if they have children under age 6.
The new law now allows Californians with Individual Tax Identification Numbers, or an ITIN, who earn less than $30,000 a year, to access the tax credit. ITINs are commonly used by undocumented residents to pay taxes.
The tax credit expansion would cost the state about $65 million a year, according to the Franchise Tax Board.
“This comes at a really important time,” said Alissa Anderson, a senior policy analyst at the California Budget & Policy Center. “It’s especially needed in times of crisis, and we’re in the midst of the worst recession that we’ve seen in decades.”
When the California Earned Income Tax Credit was created in 2015, Californians without Social Security Numbers were not eligible for the tax credit. The federal Earned Income Tax Credit, established in the 1970s, still requires someone with a Social Security Number to claim the credit and the program has not been expanded to ITIN filers.
Anderson of the budget center estimates the state expansion could help between 500,000 to 700,000 Californians.
“This is really important for California families and undocumented workers and their children, who are important members of our communities and really need every dollar to make sure that they can pay for food and housing and other necessities,” she said.
A person, with no children, earning $12,480 a year would receive $136 through the California Earned Income Tax Credit. A parent with two kids earning the same amount each year would receive $1,059 through the tax credit.
Newsom has enhanced the social safety net for undocumented immigrants in other ways during the coronavirus outbreak. After undocumented immigrants were excluded from federal emergency coronavirus aid packages, California became the first and only state to provide $75 million in disaster relief assistance to undocumented immigrants. The assistance was expected to help 150,000 undocumented Californians.
“We thank Gov. Newsom for seeing these essential workers in their entirety, for the human beings and full California residents that they are,” said Assemblywoman Lorena Gonzalez, D-San Diego.