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Blog Post · April 9, 2024

Are California’s Foster Youth Claiming the State’s New Tax Credit?

photo - Teenager Doing Paperwork

Starting last year, California added the Foster Youth Tax Credit (FYTC) to its suite of credits for low-income individuals and families. Nearly 5,000 young adults with a current or recent connection to foster care claimed up to $1,083 when they filed their 2022 tax returns, in addition to claiming the CalEITC and (potentially) the Young Child Tax Credit. A key goal of the FYTC is to alleviate poverty among young adults through direct cash assistance and also indirectly, by encouraging work. How well is the credit working so far?

About 17,000 youth ages 13 to 20 were in foster care in October 2023, but many more Californians have been in foster care at some point in the recent past. According to our calculations (using CCWIP data), roughly 30,000 former or current foster youth ages 18–25 who had earnings in 2022 might have been eligible for the credit. While it is likely that some who might appear eligible had earnings above the FYTC’s $30,000 cap, our analysis suggests that a small share of eligible young adults—as low as one in six—claimed the credit. This is much smaller than the share of California tax filers who claimed the federal EITC and the share claiming the CalEITC.

Many FYTC claimants (42%) earned between $1 and $10,000 in 2022; 36% made between $10,001 and $20,000, and 22% made between $20,001 and $30,000. Filers eligible for the FYTC were much more likely to prepare their own taxes (80%) or use a federally sponsored Volunteer Income Tax Assistance (VITA) site (10%) than those who claimed the CalEITC (40% and 2%, respectively). While it is difficult to know for sure, it may be that FYTC claimers are less likely to pay out of pocket for tax preparation services simply because they are younger than CalEITC claimers—while FYTC claimants must be ages 18 to 25, only 19% of CalEITC claimants are 25 or younger.

figure - FYTC claimants are more likely than CalEITC claimants to prepare their own taxes

As of early March 2024, about 2,600 current or former foster youth have claimed credits of up to $1,117. This is about 6% higher than the number filing as of early March 2023—indicating that California may have about the same number of FYTC claimants in the credit’s second year, although potential claimants have until mid-October to file their taxes.

So far, the FYTC has fulfilled some of its potential, but has a ways to go to fully realize its goals. The state Department of Social Services is developing outreach materials; this, along with additional outreach by stakeholder organizations, could help increase utilization of the credit.


California Earned Income Tax Credit foster youth Health & Safety Net income Poverty & Inequality tax credits taxes