California Tax Credits
When you are looking for a State as an example of how tax laws can be used for political and social purposes, look at California. California Tax Credits are among the most proactive in the country.
California Tax Credits
California offers a wide range of tax credits that cover a wide variety of circumstances that are not considered for tax breaks in other States and certainly not at the Federal level. California has been a leader in the use of tax credits to encourage certain positive actions. However, the list of tax credits in California changes from year to year as some programs expire without renewal and others begin.
Until 2005, California had one of the most progressive tax credits in the country for the purchase and installation of alternative energy sources such as solar or wind power. This credit expired and was not renewed. It is essential to stay abreast of the changes in California when considering expenditures that you think will produce a tax credit.
One of the interesting California Tax Credits is the non-refundable Renters Credit. This unique tax credit recognizes the disadvantages that renters have when compared with homeowners. Not only do homeowners gain equity when making monthly mortgage payments while renters just wave goodbye to their funds, but homeowners are eligible for deductions on the mortgage interest. The California Renter’s Credit allows a credit against State Income tax for qualified renters in an attempt to level the playing field a bit.
The list of Tax Credits for California is long. Many of the credits mirror the Federal credits and supplement them, but many others are unique to California. There is, for example, a credit for “senior heads of households.” The credits are more than just for the benefit of individuals. The Natural Heritage Credit allows up to 55% of the fair market value of any property of scenic, cultural, or historical value that is donated for public use.
Tax credits are often used to encourage certain activities and even to discourage others. California is one of the leaders in the country for the use of tax credits for these purposes. If you are a resident of California or pay income taxes there, it is to your benefit to keep up with the coming and goings of these credits. Although the list is long and varied of current credits, the list of expired credits is equally large.