CA AB107

Establishes a California Earned Income Tax Credit for taxable years beginning January 1, 2015, allowing eligible individuals a credit equal to a specified percentage of the federal earned income tax credit, multiplied by an adjustment factor set in the annual Budget Act (initially zero percent).

Sets California credit percentages and phase-out rates at 7.65% for individuals with no qualifying children, 34% for one qualifying child, and 40% for two or more qualifying children, with corresponding earned income and phase-out amounts.

Requires the Franchise Tax Board to annually report to specified legislative committees on the credit's effectiveness, including the number of returns claiming it, average credit amounts, distribution by dependents and income ranges, and estimates of families lifted out of deep poverty.

Modifies penalty provisions for underpayment of estimated taxes to exclude penalties when the earned income tax credit adjustment factor decreases year-over-year, and adds a penalty for tax preparers' failure to be diligent in determining earned income credit eligibility.

Makes an appropriation from the Tax Relief and Refund Account for refunds exceeding tax liability and takes effect immediately as a budget-related bill.