The College Access Tax Credit (CATC) is a new state tax credit for taxpayers who make authorized contributions of money to the CATC Fund. Senate Bill 798, which the governor recently signed, established the credit for both personal and corporate income taxes under California Revenue and Taxation (R&TC) Code Sections 17053.86 and 23686.
The CATC is available for taxable years 2014-2016. The total amount that CEFA can allocate for the CATC each year is $500 million. To claim the credit, a taxpayer must make a contribution to the CATC Fund administered by the California Educational Facilities Authority (CEFA). Taxpayers must receive a certificate from the CEFA documenting the amount of the contribution and the credit amount in order to claim the credit on their state income tax return. The amount of the credit allocated and certified by the CEFA for a taxpayer for each taxable year is:
60 percent of the amount contributed by the taxpayer for the 2014 taxable year.
55 percent of the amount contributed by the taxpayer for the 2015 taxable year.
50 percent of the amount contributed by the taxpayer for the 2016 taxable year.
Taxpayers may claim the CATC on their California tax return. They may also be able to take a charitable deduction for the contribution to CATC Fund on their federal tax return. Any charitable deduction for contributions made to the CATC Fund claimed on a federal tax return must be added back as a state adjustment on the California tax return, as taxpayers are not allowed a deduction and a credit for the same contribution.
CEFA began accepting applications for an allocation of the credit on November 3, 2014. Additional information on making a CATC contribution is available on CEFA’s website.