California Affordable Childcare Act: Personal Income Tax and Corporation Tax.

Assembly Member Muratsuchi's California Affordable Child Care Act proposes a 0.05% tax on personal and corporate income above $10 million to fund grants for licensed childcare facilities across the state. The tax would apply to employers with one or more employees beginning in 2026, though businesses that provide on-site childcare or fully reimburse employees' childcare costs would be exempt.

The legislation establishes the Affordable Childcare Reimbursement Fund to collect and distribute the tax revenue. Starting in fiscal year 2027-28, the State Treasurer would award grants to licensed childcare facilities for two specific purposes: reducing the rates charged to families and expanding capacity by hiring additional staff. The fund would operate through continuous appropriation, allowing disbursement without annual budget approval.

According to the bill's findings, California currently has 2.7 million children age five and under, with 62% having all available parents in the workforce. The average annual cost of infant care in the state is $19,000, while childcare workers earn an average of $37,270. The findings indicate California's economy loses $17 billion annually due to childcare-related challenges.