FOR IMMEDIATE RELEASE

CONTACT:
Randall Echevarria
randall@paschalroth.com

Free Tax Prep Investment Will Connect Families to Powerful Anti-Poverty Tax Credits 

After Intense Advocacy, Legislature & Governor Restore $2M in Education and Outreach Services

SACRAMENTO, CA—Members of the California Earned Income Tax Credit (CalEITC) Coalition applauded the restoration of $2 million in Free Tax Preparation Assistance (FTPA), Individual Taxpayer Identification Number (ITIN) application support, and Education and Outreach (E&O) in AB 157. As poverty rates continue to soar, this funding helps Californians and families who are struggling to afford the basics and access thousands of dollars in tax credits to which they are entitled. Funding for the services that help families access vital benefits was originally cut by 50% in the FY 24-25 state budget agreement, but the $2 million included in a budget trailer bill signed by Governor Newsom today partially restores this year’s investment to a total of $12 million from the state general fund.

“We are thrilled to see an additional $2M allocated to Free Tax Preparation Assistance, Education and Outreach grants for folks filing with ITINs – a $12M total investment,” said Shimica Gaskins, President & CEO of GRACE-End Child Poverty in California. “These grants provide Californians with low incomes, who are often ineligible for federal tax credits, access to trusted community partners who ensure they receive every credit they are entitled.”

California had dedicated $20 million over the past two years to services that increase the take up of the state tax credits like the CalEITC, Young Child Tax Credit, and Foster Youth Tax Credit, but this funding was cut down to only $10 million as part of the budget agreement in June. Since the budget’s passage, CalEITC advocates warned that the deep cut would threaten access to crucial programs and services that tens of thousands of Californians rely on and access through tax preparation assistance provided by trusted community-based organizations. While the CalEITC Coalition celebrated the $2 million restoration in funding, advocates say that the additional $8 million is still urgently needed to maintain current staffing capacity and infrastructure to connect Californians to vital tax preparation services and provide families and individuals with low incomes access to free tax preparation assistance, ITIN application and renewal help, and state and federal tax credits.

“In these tough budget times, we appreciate Governor Newsom and the Legislature funding financial relief to Californians facing hard times. Initiatives like the CalEITC, Young Child Tax Credit (YCTC), and free tax preparation services are just a few examples of programs that help residents with low incomes put money back in their pockets,” said Amy Everitt, President, Golden State Opportunity. “It’s expensive to be poor in California and the Governor and Legislature are making smart investments to ensure families can make ends meet.”

In 2023, the CalEITC, YCTC, and Foster Youth Tax Credit directed more than $1.3 billion in cash back into the hands of over 3.5 million Californians, helping struggling families afford the soaring costs of everyday basic necessities like food, housing, and child care. In California, over 1 in 3 households does not earn sufficient income to meet their basic needs. Many of these families were able to learn about the various tax credits they were eligible for because of free tax preparation services. In the same year, FTPA E&O investments saved Californians an astounding $38 million in paid tax preparer services and helped more than 110,000 families and households file their state and federal returns and claim their state and federal tax credits for free.

“We appreciate the Governor’s and Legislature’s dedication to providing California households with the resources necessary to claim anti-poverty tax credits such as the CalEITC, Young Child Tax Credit, and Foster Youth Tax Credit,” said Pete Manzo, President & CEO of United Ways of California. “Although the $12 million allocated to these essential programs for the 2024-25 budget year falls short of the $20 million provided to community-based organizations in the past two years, reducing the cut from a 50% reduction in funding to 40% is a step in the right direction. With the assistance of VITA volunteers, CAAs, and site coordinators, Californians can save millions of dollars each year through free tax preparation, apply for or renew their ITINs, and claim all eligible tax credits. Funding these programs is vital to expanding the financial prosperity of millions of California households.”