Back in 2021, JBAY proposed a new poverty-reduction measure for foster youth: the nation’s first-ever Foster Youth Tax Credit (FYTC). Thanks to the visionary support of Governor Gavin Newsom, former State Controller Betty Yee, and Senator Anna Caballero, the measure passed and received its first year of funding in the 2022 California state budget.
Now, three years later, we have the data to assess the effectiveness of this first-of-its-kind policy. We are thrilled this refundable tax credit has put $17.2 million into the hands of more than 16,000 current and former foster youth—plus an estimated $18.7 million in additional credits unlocked for young people in the process of filing. In 2025, the credit increased the annual income of recipients by 10% for single filers and 26% for filers with dependent children.
“Young people, ages 18-25, are not typically at a stage of life where they are earning a lot of money,” said Simone Tureck Lee, JBAY’s Director of Housing & Economic Mobility. “Many are still in school or very early in their careers. And foster youth do not tend to have a ton of family financial support or the safety net of a family home they can fall back on. This increase in income is significant, particularly in a state like ours with such a high cost of living.”
The tax credit is administered by the California Franchise Tax Board in partnership with the California Department of Social Services, which verifies filers’ eligibility. Youth must be at least 18 and no more than 25 years old at the end of the tax year; have been in foster care on or after their 13th birthday; and have earned at least $1 in the given tax year to be eligible for the FYTC.
JBAY estimates over 33,000 young adults across California are currently eligible and has worked hard to spread the word. We partnered with youth-serving organizations to host webinars, presentations, and a friendly competition among counties. We funded six free, one-on-one professional tax prep sites across the state to assist foster youth, and developed and disseminated resources to guide youth who file taxes on their own. Finally, we sponsored Senate Bill 624, the FOSTER Act, authored by Senator Caballero, which passed this October, requiring counties to proactively notify all eligible foster youth about the FYTC beginning early next year.
Of all eligible youth across the state, 17% claimed the tax credit this year.* “Seventeen percent might not seem like a lot,” said Tureck Lee. “But it’s an increase over years one and two. This rate is affected by the number of youth in foster care overall, which is declining, by fluctuation in employment, and by varying levels of resources county by county to support youth in the process. Overall, we are very encouraged by the upward trend.”
As our community partners have shared, the tax credit assistance and outreach has brought additional benefits for youth. “It’s great to have this one-time influx of cash, but it’s also important to think about what wonderful things you could plan for your future with those funds,” said Veronica Galvez, Vice President of Programs at the Community College Foundation, which runs a tax prep site in LA County serving foster youth. “We provide financial literacy classes to demystify this weird process for young people and help them think about the bigger picture.”
The main barrier to increasing the FYTC receipt rate is reaching youth who exited foster care prior to turning 18 through guardianship, adoption, or reunification. “We need different strategies to reach them,” said Imelda Islas-Olivo Project Manager of Housing & Economic Mobility at JBAY. “One thing we’ve been looking into is working with folks at county offices of education, because they have different data and they work with all students. They might be able to help us reach youth whose information is no longer in the child welfare system.”
Other tactics to increase uptake include targeted training regarding the foster youth tax credit for tax prep site volunteers serving a broader population; replicating pilot efforts like LA’s “Claim Your Cash,” which establishes tax filing as a priority for all county agencies; standardizing financial literacy education for older foster youth across the state; and making sure youth have a bank account when they exit the foster care system.
We are grateful for the support and collaboration of our funders and partners and look forward to expanding our efforts. To learn more and explore our findings in greater depth, check out our report: The Nation’s First Tax Credit for Foster Youth.
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* At the time the JBAY report was published, 16% of eligible youth had claimed the FYTC; by the end of the tax season, this figure had risen to 17%.