California Earned Income Credit Calculator

California EITC Formula:

\[ CalEITC = \min((Earned Income \times Cal Credit Rate), Cal Max Credit) - \max(0, (Earned Income - Cal Phaseout Start) \times Cal Phaseout Rate) \]

Earned Income ($):

Cal Credit Rate (decimal):

Cal Max Credit ($):

Cal Phaseout Start ($):

Cal Phaseout Rate (decimal):

CalEITC ($):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is California Earned Income Credit?

The California Earned Income Tax Credit (CalEITC) is a refundable state tax credit for low to moderate-income working individuals and families. It supplements the federal EITC and helps reduce poverty by providing financial support to eligible taxpayers.

2. How Does the Calculator Work?

The calculator uses the CalEITC formula:

\[ CalEITC = \min((Earned Income \times Cal Credit Rate), Cal Max Credit) - \max(0, (Earned Income - Cal Phaseout Start) \times Cal Phaseout Rate) \]

Where:

$ Earned Income $ — Total earned income from employment
$ Cal Credit Rate $ — California credit rate percentage (as decimal)
$ Cal Max Credit $ — Maximum credit amount available
$ Cal Phaseout Start $ — Income level where phaseout begins
$ Cal Phaseout Rate $ — Phaseout rate percentage (as decimal)

Explanation: The formula calculates the credit amount based on earned income, applying the appropriate credit rate up to the maximum credit, then reduces the credit based on the phaseout rules for higher income levels.

3. Importance of CalEITC Calculation

Details: Accurate CalEITC calculation is crucial for low-income families to maximize their tax refunds and receive the financial assistance they're entitled to. It helps reduce tax burden and provides essential support for basic needs.

4. Using the Calculator

Tips: Enter all values in dollars. Credit rate and phaseout rate should be entered as decimals (e.g., 0.3 for 30%). All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: Who qualifies for CalEITC?
A: Working individuals and families with earned income below certain thresholds, meeting specific eligibility requirements set by California tax authorities.

Q2: How does CalEITC differ from federal EITC?
A: CalEITC is a state-level credit that supplements the federal EITC, with different income limits and credit amounts specific to California residents.

Q3: Is CalEITC refundable?
A: Yes, CalEITC is fully refundable, meaning you can receive the credit even if it exceeds your tax liability.

Q4: What income types qualify as earned income?
A: Wages, salaries, tips, and other employee compensation; net earnings from self-employment; union strike benefits; certain disability benefits.

Q5: How often are CalEITC parameters updated?
A: California tax authorities typically update credit rates, maximum credits, and phaseout thresholds annually for inflation and legislative changes.