“California’s budget addresses the state’s most pressing needs, and prioritizes getting dollars back into the pockets of millions of Californians who are grappling with global inflation and rising prices of everything from gas to groceries," Newsom, Senate President Pro Tem Toni G. Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) said in a joint statement.
The plan calls for $9.5 billion in tax refunds to Californians, providing as much as $1,050 to families this fall.
Sliding income scale
The plan would provide refunds on a sliding scale based on three income levels:
An individual who earns up to $75,000 a year would receive a $350 refund, which would double to $700 for joint filers earning as much as $150,000. Households would receive an additional $350 payment if they claimed any dependents, for a maximum refund of $1,050.
At the next income level, single filers who earn up to $125,000 would get $250 refunds. Households that file jointly and earn up to $250,000 would receive $500. Children or any other dependents would qualify taxpayers for an additional $250 payment, making families in the income bracket eligible for as much as $750 total.
Individuals who earn up to $250,000 would receive $200, and joint filers with income of as much as $500,000 would receive $400. Households with dependents would receive an extra $200, making this income bracket eligible for a maximum of $600.
Newsom ultimately gave up his effort to tie refunds to vehicle ownership through the Department of Motor Vehicles and agreed with a legislative plan to work with the Franchise Tax Board to send direct deposits and debit cards to taxpayers.
Leaders of the Senate and Assembly compromised on their desire to exclude wealthy Californians from being eligible for refunds and settled on an income cap of $250,000 for individual taxpayers and $500,000 for joint filers — more than double the limit in their original proposal.
Though Newsom originally hoped to get money back in people’s pockets this summer, discord among Democrats at the state Capitol delayed the timeline for months. Refunds to offset the highest fuel costs of any state in the nation will probably not start going out until October.
Federal gas tax relief
Last week, President Biden asked Congress to suspend the federal gas tax through September, a move that he said could shave off 18 cents per gallon and “give families just a little bit of relief.” It is not clear whether Biden can persuade Congress to go along with the gas tax holiday as Republicans and some Democrats expressed skepticism about whether it would end up saving drivers money.
This story originally appeared in Los Angeles Times.