DPSS Pilot Program: Eligibility, Taxes, and Benefit Impact

The DPSS Breathe pilot program was a Los Angeles County guaranteed income experiment that paid $1,000 a month, with no strings attached, to 1,000 randomly selected low-income residents for three years and to 200 former foster youth for two years. Enrollment is closed as of 2026, and no new applications are being accepted for any cohort.¹ If you were selected, the questions that still matter are how the money interacts with your other benefits and what you owe in taxes. If you weren’t, the program’s rules are worth understanding because California continues to fund similar pilots elsewhere.

Breathe was run by the county’s Department of Public Social Services together with the Chief Executive Office. The money landed on a prepaid debit card each month, so no bank account was needed. Recipients could spend it on anything: rent, groceries, a car repair, childcare. No work requirement, no reporting on purchases.

Who Got Paid and How Much

The main cohort of 1,000 people received $1,000 per month for three years. A separate group of 200 former foster youth received the same $1,000 per month for two years.¹

In August 2024, the Board of Supervisors adopted a motion expanding Breathe to more than 2,000 foster youth still in care between the ages of 18 and 21. That expansion used a different structure: $500 monthly or $1,500 quarterly for 18 months, paired with career counseling, education support, and financial training.² Eligible youth were notified through their DCFS caseworkers rather than a public application.

Who Qualified

Eligibility was pegged to LA County’s Area Median Income, not the Federal Poverty Level. For the main cohort, applicants had to be over 18, live in a neighborhood at or below 100% of the county’s Area Median Household Income, and have been financially harmed by the COVID-19 pandemic.¹ A single-person household had to earn at or below 100% of AMI; households of two or more could earn up to 120% of AMI.

The pre-tax income caps for the former foster youth expansion, which used the same AMI thresholds, were:

1 person: $56,000
2 people: $76,800
3 people: $86,400
4 people: $96,000
5 people: $103,700

For households larger than eight, the threshold rose by $7,700 per additional member.¹

The former foster youth track had its own age band: 21 to under 24, and applicants had to have been in LA County DCFS foster care on or after their 18th birthday. Across all tracks, applicants couldn’t be enrolled in another guaranteed income program run by the county, a city, or any other public or private entity. Living outside a qualifying neighborhood, even elsewhere in LA County, was also disqualifying, because Breathe targeted areas with historically lower median incomes.

How Selection Worked

Selection was not first-come, first-served. The University of Pennsylvania’s Center for Guaranteed Income Research ran a blind lottery, randomly drawing participants from the full pool of eligible applicants.³ Submitting early made no difference. Selected participants were contacted by Strength Based Community Change (SBCC) using the contact information on their application. Applicants who were not selected received an email or text only if they had opted in during the application; otherwise, the county updated the Breathe website once notifications finished, and silence meant no.¹

How the Payments Affect Other Benefits

This is the piece that trips people up. The interaction between a $1,000 monthly payment and existing benefits varies by program, and misreporting or failing to check can cost you.

CalWORKs and CalFresh

Under California law, payments from the state-funded Guaranteed Income Pilot Program are excluded from income when CalWORKs eligibility and grant amounts are calculated. Assembly Bill 120 extended that treatment to all guaranteed income payments received by CalWORKs applicants and recipients. CalFresh also excludes the payments from income calculations, but only if the guaranteed income program includes at least some non-governmental funding. A program funded entirely by government dollars is not exempt for CalFresh purposes, even though it remains exempt for CalWORKs.⁴

SSI

The Social Security Administration excludes “state or local assistance based on need that is wholly funded by the state or local area” from SSI income calculations.⁵ Breathe payments that meet that definition would not reduce SSI. But the SSA defines income broadly as anything received in cash or in-kind that can be used for food or shelter, and payments from programs with mixed funding sources may not clearly fall under the state-assistance exclusion.⁶ If you receive SSI, confirm your specific situation with your local SSA office.

Section 8 and HUD-Assisted Housing

HUD counts guaranteed income payments as annual income in most cases, which can raise the rent portion you pay. Two exceptions exist. If the payments will end within 12 months of a family’s income examination, the housing authority may exclude them as nonrecurring income. Public housing authorities can also create a “permissive deduction” that disregards the payments when calculating adjusted monthly income, but they aren’t required to, and they receive no additional subsidy to offset the resulting rent reduction.⁷ Whether either exception applies to you depends on local policy. Tell your housing authority and ask how the payments will be treated before your next income recertification.

Taxes on Breathe Payments

California excludes guaranteed income pilot payments from state taxable income under a provision tied to Welfare and Institutions Code Section 18997. That exclusion was originally scheduled to expire on July 1, 2026. Senate Bill 573, introduced in the 2025-2026 legislative session, would extend it through July 1, 2031.⁸ Payments received in 2025 were covered by the existing exclusion and should not have triggered California income tax. Whether the exclusion continues past mid-2026 depends on whether SB 573 becomes law.

Federal tax treatment is different. There is no parallel IRS exclusion for guaranteed income pilot payments, and the IRS generally treats cash payments as taxable unless a specific exclusion applies. Some legal analyses argue these payments qualify as excludable gifts under 26 U.S.C. § 102, since recipients owe nothing in return. The Franchise Tax Board’s analysis of SB 573 acknowledged the federal gift exclusion but noted that whether the IRS would treat a government-funded pilot payment as a “gift” has not been definitively resolved.⁸ Keep records of every payment you received and talk to a tax professional before filing your federal return.

Where the Program Stands Now

Breathe’s application period and enrollment are complete and closed, and no new applications are being accepted.¹ Participants in the original three-year cohort are nearing the end of their payments or have already finished. The University of Pennsylvania’s Center for Guaranteed Income Research is studying outcomes, and those findings will shape whether the county or the state launches successor programs.

California’s broader Guaranteed Income Pilot Program, run by the California Department of Social Services, has funded multiple pilots across the state beyond Breathe. If you’re looking for a current opportunity, check the CDSS website for active programs.⁴

1
Los Angeles County. Breathe: LA County’s Guaranteed Income Program
2
ABC7 Los Angeles. LA County to Provide Guaranteed Stipends to 2,000 Foster Dependents
3
Center for Guaranteed Income Research. Breathe | LA County, CA
4
California Department of Social Services. Guaranteed Income Pilot Program
5
Social Security Administration. Income Exclusions for SSI Program
6
Social Security Administration. Understanding Supplemental Security Income SSI Income
7
U.S. Department of Housing and Urban Development. HUD-assisted Housing and Guaranteed Income Program Payments
8
Franchise Tax Board. SB 573 – Guaranteed Income Pilot Programs Income Exclusion