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AB 1428

California Affordable Childcare Act: Personal Income Tax and Corporation Tax.

2025-2026 Regular Session Introduced by Al Muratsuchi

Imposes a temporary surtax on very high earners and large corporations to fund grants that lower family child care costs and expand licensed care slots.

In committee: Set, second hearing. Hearing canceled at the request of author.
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Bill Summary · AB 1428

AB 1428 — California Affordable Child Care Act (Muratsuchi) — Bill Summary

Status: Introduced Feb 21, 2025; in committee (set for second hearing; hearing canceled at request of author).

Purpose / Intent

Would create a temporary, targeted surtax on very large taxpayers and corporations to fund grants to licensed child care providers, with the stated goal of reducing family child care costs, expanding available slots, and strengthening the child care workforce.

The bill’s legislative findings note: 2.7 million children ages 0–5 in California (62% with all available parents in the workforce); typical infant care costs around $19,000/year; average child care provider wages ≈ $37,270/year; and an estimated $17 billion annual economic loss due to child care challenges.

Key provisions

  • Additional surtax (Personal Income Tax and Corporation Tax):

    • Imposes an additional tax on income in excess of $10,000,000 for each taxable year beginning on or after Jan 1, 2026 and before Jan 1, 2031.
    • The bill text as circulated lists the rate as “0.05 0.5 percent.” The drafting shows both figures; the intent appears to be a small surtax on income above the $10M threshold (final rate subject to the enacted version).
    • Applies only to taxpayers/corporations that employ one or more employees.
    • Exemptions: the surtax does not apply if the employer (individual or corporation) either (A) provides child care for employees during working hours or (B) fully reimburses employees for necessary child care services.
    • Operative only until Dec 1, 2031 (statutory repeal on that date).

  • New fund and grant program:

    • Establishes the Affordable Childcare Reimbursement Fund (in the State Treasury).
    • All revenues from the additional surtax, less Franchise Tax Board (FTB) administrative reimbursements, are deposited into the fund.
    • Moneys are continuously appropriated to the State Treasurer to fund grants beginning in fiscal year 2027–28 to child care facilities licensed under the California Child Day Care Facilities Act.
    • Grant uses are limited to (1) lowering rates charged by licensees (i.e., to families) and (2) increasing available spaces (by hiring additional employees).

Who is affected

  • Payors: High‑income taxpayers and corporations with taxable income exceeding $10 million that employ at least one person (subject to the employer-provided child care / reimbursement exemptions).
  • Recipients: Licensed child care facilities (grant recipients) and families who may receive lower child care rates and expanded slots.
  • Administration: Franchise Tax Board (for administration) and State Treasurer (grant administration).

Fiscal and procedural notes

  • The bill creates a continuously appropriated special fund and therefore constitutes an appropriation.
  • Because it raises statutory taxes for some taxpayers, the bill would constitute a tax increase under Article XIII A, Section 3 of the California Constitution and requires a 2/3 vote of each legislative house for passage.
  • The bill does not include a revenue estimate in the circulated text; net revenues would depend on the final surtax rate, compliance, and administrative costs.

Timeline highlights

  • Tax applies to taxable years beginning Jan 1, 2026 through taxable years beginning before Jan 1, 2031; statutory provisions repeal on Dec 1, 2031.
  • Grant program to begin in fiscal year 2027–28.
  • Current legislative status: in Assembly Revenue & Taxation Committee (hearing set then canceled).

Compiled from official sources — confirm details with the bill’s official record.

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