California does not have a general child tax credit modeled on the federal one. What it offers instead is the Young Child Tax Credit, worth up to $1,189 per return for tax year 2025, layered on top of the California Earned Income Tax Credit (CalEITC). Both are refundable, so they can generate a refund even if you owe no state tax. The catch: you cannot claim the Young Child Tax Credit unless you first qualify for the CalEITC. That means the CalEITC rules are where eligibility actually begins.
Who Qualifies
For tax year 2025, you qualify for the CalEITC if you meet all of the following:1Franchise Tax Board. Eligibility and Credit Information
- You lived in California for more than half of the tax year.
- You had at least $1 of earned income but no more than $32,900.
- You, your spouse or registered domestic partner, and any qualifying children each have a Social Security Number or an Individual Taxpayer Identification Number.
- If you have no qualifying children, you are at least 18 years old.
The $32,900 income ceiling applies regardless of family size.
What Counts as Earned Income
Earned income means wages, salaries, tips, and net earnings from self-employment, including gig and freelance work. Unemployment insurance, Social Security, disability payments, and investment returns do not count. A household could have $40,000 in total income and still qualify if only $25,000 came from actual work.
The Young Child Tax Credit Add-On
To get the Young Child Tax Credit on top of the CalEITC, you need at least one qualifying child who was under age six on December 31 of the tax year.2Franchise Tax Board. Young Child Tax Credit YCTC A qualifying child is your son, daughter, stepchild, foster child, or a descendant such as a grandchild who lived with you for more than half the tax year.
There is one meaningful exception for self-employed filers who had a bad year. The YCTC does not require positive earned income. If your business ran a net loss, you can still qualify as long as your total wages don’t exceed $35,640 and your net loss doesn’t exceed $35,640 for tax year 2025.2Franchise Tax Board. Young Child Tax Credit YCTC
The YCTC also phases out. The base phase-out threshold in the governing statute is $25,000, adjusted for inflation each year, and the credit shrinks by $20 for every $100 of earned income above that threshold.3California Legislative Information. California Revenue and Taxation Code 17052.1 The FTB’s instructions for Form 3514 contain the exact calculation tables.
How Much You Can Get
The CalEITC amount scales with earned income and the number of qualifying children. Maximums for tax year 2025:1Franchise Tax Board. Eligibility and Credit Information
- No qualifying children: up to $302
- One qualifying child: up to $2,016
- Two qualifying children: up to $3,339
- Three or more qualifying children: up to $3,756
The Young Child Tax Credit adds up to $1,189 on top of those amounts.2Franchise Tax Board. Young Child Tax Credit YCTC That figure is per return, not per child. Two children under six will not double it. A family with two young children and earned income in the right range could receive up to $4,528 combined ($3,339 plus $1,189).
Your actual credit will usually be less than the maximum. The credits rise as earned income climbs from zero, hit a peak, and then decline as income approaches the $32,900 ceiling. The FTB provides an online EITC calculator that gives a specific estimate based on your income and family size.
How to Claim It
You claim the CalEITC and YCTC by completing Form FTB 3514 and attaching it to your California income tax return (Form 540, 540 2EZ, or 540NR for part-year residents and nonresidents).4Franchise Tax Board. California Earned Income Tax Credit If you e-file, your tax software walks you through the questions and generates the form.
One error the FTB frequently flags is transferring the wrong federal adjusted gross income onto Form 3514. That single mistake can cause the FTB to recalculate or deny your credit after you’ve filed.5Franchise Tax Board. Notice of Tax Return Change Make sure the AGI on your state form matches your federal return exactly.
Refund timing depends on how you file. Electronic returns typically produce a refund within three weeks. Paper returns can take up to three months.6Franchise Tax Board. Where’s My Refund E-filing with direct deposit is the faster route.
Free Filing Options
If you qualify for these credits, you probably don’t need to pay for tax preparation. The FTB offers CalFile, a free online tool for preparing and submitting your California return directly. The federal Volunteer Income Tax Assistance (VITA) program provides free in-person help at community sites across California, with preparers trained on the CalEITC and YCTC. Many commercial tax software providers also offer free state filing for simple returns. Paying $100 to $400 for professional preparation when your total credit might be $1,500 eats into the benefit.
If the FTB Denies or Adjusts Your Credit
Claiming a credit you don’t qualify for has consequences. The FTB can disallow the CalEITC or YCTC and require repayment. Knowingly filing false information can result in disallowance for future tax years, not just the year in question. The FTB also has authority to adopt emergency regulations aimed at preventing improper claims, particularly around self-employment income, which is harder to verify than W-2 wages.3California Legislative Information. California Revenue and Taxation Code 17052.1 If you receive a Notice of Tax Return Change adjusting your credit, respond with documentation rather than ignoring it.