What Is the Deal With California Tax Relief?

Gov. Gavin Newsom and legislative leaders have agreed to provide as much as $1,050 to millions of California families to help with rising gas prices and inflation, they confirmed Sunday night.

The three-tier program would benefit an estimated 23 million California taxpayers, including single filers earning up to $250,000 and joint filers earning up to $500,000, with low- and middle-income households receiving incrementally more money.

CalMatters reported Friday that the $9.5 billion in tax refunds are part of a $12 billion relief plan that is central to a larger $300 billion budget deal announced by state leaders Sunday night.

“California’s budget addresses the state’s most pressing needs and prioritizes putting money back into the pockets of millions of Californians who are dealing with global inflation and rising prices for everything from gas to groceries,” Newsom, Senate President Pro Tem Toni Atkins, and Assembly Speaker Anthony Rendon said in a joint statement.

Households earning up to $75,000 for individuals or $150,000 for joint filers would receive $350 per taxpayer, plus an additional $350 if they have at least one dependent, under the tax rebate plan. As a result, a single parent would receive $700, while a two-parent family would receive $1,050.

What is the deal with California tax relief

The amount would be reduced to $250 for households earning up to $125,000 for individuals or $250,000 for joint filers, and to $200 for households earning up to $250,000 for individuals or $500,000 for joint filers. If a parent has at least one dependent, they will receive an additional $250 or $200 in each of these tiers.

Californians with incomes above $250,000 for an individual or $500,000 for joint filers would not receive a rebate. The relief package also includes $1.1 billion in aid for recipients of Supplemental Social Security or CalWORKs.

According to an email sent earlier this week to Assembly Democrats, “the plan recognizes that some people are hurting more than others and provides them with greater relief.”

As the Legislature passed a placeholder budget earlier this month, differences in proposed spending for universities, housing, and social safety net programs, as well as the details of a major climate package, lingered. The biggest impediment to reaching an agreement, which must be completed before lawmakers leave for the summer recess at the end of the month, had been a disagreement over direct financial assistance for taxpayers.

Newsom and legislative leaders were at odds for months over whether to target the relief at drivers or the neediest Californians.

The governor called for a plan to address spiraling gas prices during his State of the State speech in March, which has since reached an average of more than $6 per gallon. He proposed sending up to two $400 debit cards to each registered vehicle owner in the state.

Legislative leaders vehemently opposed that approach, which did not include a cap on income. Progressive critics pointed out that it would benefit millionaires and billionaires while excluding Californians who are too poor to own a car.

The agreement is much closer to the program that Atkins and Rendon devised, under which the state would have cut $200 checks for each eligible taxpayer and their dependents living in households making less than $250,000 per year for a couple or $125,000 per year for an individual.

Even though more and more Republicans and Democrats are asking for it, the plan does not include a wide-scale suspension of the state’s gas tax, which is set to go up by three cents on July 1. The relief plan does, however, suspend some of the diesel sales tax, which will lower prices by about 23 cents per gallon and cost $439 million.

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