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Bill

Bill

AB 397

Personal Income Tax Law: young child tax credit.

2025-2026 Regular Session Introduced by Patrick Ahrens and 27 co-sponsors

California proposes a state tax credit for families with young children to reduce income tax liability, potentially increasing household budgets for working parents statewide.

In committee: Held under submission.
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Bill Summary · AB 397

Legislative bill overview

AB 397 proposes to establish a new young child tax credit under California's personal income tax law. The bill would provide tax relief specifically targeted at families with young children, though the specific credit amount, age eligibility, and income thresholds are not detailed in the available legislative actions.

Why is this important

Tax credits for families with young children directly affect household finances for working parents and can influence childcare affordability and family economic stability. California's high cost of living, particularly childcare expenses, makes this policy relevant to a significant portion of the state's workforce.

Potential points of contention

  • Fiscal impact and state revenue: The cost to California's general fund depends on credit amounts and eligibility—potentially substantial given the state's large population, raising questions about whether the state can afford this during budget constraints
  • Income eligibility and progressivity: How the credit phases out at higher incomes will determine whether it benefits all families equally or targets lower-income households, affecting perceptions of fairness
  • Interaction with federal tax credits: California already has families claiming federal Child Tax Credits; clarifying how this state credit coordinates with federal benefits and whether it creates redundancies will be crucial

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

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