California could offer $1,000 tax incentives for car-free life for low-income residents

California could soon offer a tax incentive to certain households that do not own cars under a bill awaiting Gov. Gavin Newsom’s consideration.

Senate Bill 457, which passed the Legislature on the final day of session last week, would offer a $1,000 tax credit per household starting in January 2023 to certain low-income taxpayers who do not own a vehicle. The bill specifies that spouses jointly filing making $60,000 or less and individuals who make $40,000 or less would be qualified for the tax credit.

The bill was scaled back in an amendment after an analysis showed a budgetary price tag many lawmakers were unwilling to support.

Newsom’s consideration of the bill will come just weeks after California air regulators announced a requirement to phase out the sale of gas-powered cars by 2035, a move aimed at reducing the Golden State’s greenhouse gas emissions.

“As the impacts of climate change are felt across our state, it’s time we more aggressively commit to implementing modes of sustainable transportation,” the bill’s author, Senator Anthony Portantino, said in a statement when the bill passed. “We can invest in the future by providing financial incentives for Californians to transition from vehicles to more sustainable options.”

The bill was significantly amended in the final days of the legislative session to scale back the scope of the legislation. Initially introduced, the bill proposed a $2,500 tax credit for each family member 16 or older that exceeded the number of registered vehicles, capped at $7,500.

Portantino told The Center Square in June that the original bill was meant to incentivize car-free life and slash greenhouse gas emissions. Transportation accounts for a large share of the state’s greenhouse gas emissions inventory, accounting for 41% of emissions in 2019, according to the California Air Resources Board.

Streets for All, an LA-based group that advocates for alternatives to driving, drafted the original version of the bill in an effort to incentivize Californians to consider getting rid of a vehicle or transition to car-free life.

Michael Schneider, founder of Streets for All, told The Center Square that the bill was amended to address the fiscal cost of the incentive program, which could have prevented the bill from passing the Legislature. The original version of the bill would have resulted in General Fund losses of $700 million in fiscal year 2022-2023 and losses of $1.2 billion in subsequent years, according to a bill analysis.

Schneider said the amended version of the bill that Newsom will consider “doesn’t accomplish our initial goal,” but still has value. He noted that this iteration of the bill likely won’t convince someone to give up their car since there’s an income cap to receive an incentive, but said it could be a start.

“I’m hoping this proves to be an incredibly popular program and that the metrics show that people are interested in being incentivized not to have a car, and then hopefully we can grow the income cap and the overall program budget over time,” Schneider said, adding that Streets For All would be in support of a future measure to expand incentives and income caps for a car-free life.

Other bill supporters are hopeful that, if signed into law, the legislation will provide an incentive for lower-income Californians who already rely on public transportation and do not own a car to maintain a car-free lifestyle.

Eli Lipmen, Executive Director of Move LA, told The Center Square that the bill would help individuals who are struggling with the high cost of living, particularly in Southern California. Lipmen cited a 2019 study from LA Metro, which found that 70% of customers have an annual household income less than $35,000 and 81% have an income less than $40,000.

“For those who are transit-dependent, for whom transit is a lifeline not just the lifestyle, this provides an incredible benefit for continuing that lifestyle,” Lipmen said.

Newsom has until Sept. 30 to sign or veto SB 457 and the hundreds of other bills awaiting his consideration.