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Davis, California

Sunday, April 14, 2024

Homeless Hiring Tax Credit passed in an effort to alleviate homelessness in California

Governor Gavin Newsom signed a bill that will pay businesses to hire individuals experiencing homelessness

By SOFIA BIREN — city@theaggie.org

The Homeless Hiring Tax Credit (HHTC) was passed last year, became effective on Jan. 1 and will continue until Dec. 31, 2026. This initiative, passed through California Assembly Bill 150, outlines a system in which employers will be granted a tax credit if they hire an individual experiencing homelessness.

Through this program, employers can get anywhere between $2,500 and $10,000 annually in tax credits. The exact amount of the tax credit is dependent on how many hours the employee works. According to the California Franchise Tax Board, a maximum of three individuals experiencing homelessness may be employed each year, and employers can therefore be granted a maximum tax credit of $30,000. 

The state has set an annual budget of $30 million for the HHTC. Any employer who wants to participate can do so as long as they meet the criteria to hire an eligible employee. However, the program is designed in a way that the $30 million acts as a threshold for the number of employers who can sign on. In other words, employers are able to participate until  employers have collectively received $30 million in tax credits. 

Every year, employers can opt to continue the program, and if they choose not to, any extra credits can roll over to the following year. Furthermore, new employers can choose to participate in the HHTC every year until the $30 million threshold is reached. 

The tax credit benefits more than just the employer. In order for the employer to participate in the program, they are required to pay the employee at least 120% of state minimum wage. Housing Policy Manager for the City of Sacramento Danielle Foster said that the tax credit is an exciting initiative, not just for the Sacramento area, but for the whole state. 

“It’s really to provide a bridge from the training programs that we do in the homeless community to getting some more job experience or reentry experience into the workforce so that they can move on to the next thing or maybe move up with that same employer,” Foster said.

According to the California Franchise Tax Board, a person experiencing homelessness is eligible if they are “currently or recently homeless (within 180 days of hire) or [will] be receiving services from a homeless services provider” and be verified by a participating organization. 

The HHTC relies on “certifying organizations” to connect the potential employee to an employer. These establishments are government or community organizations that can connect people experiencing homelessness with a variety of resources. Their role is to confirm the person’s living situation, guide them through the process and finally connect them with an employer. 

The implementation of the tax credit coincides with the labor shortage in the country. HSA Coordinator for Yolo County Erica Johnson said that the tax credit came at a time when it can be beneficial to both parties.

“I think [this is an] opportunity where you have the ability to put two groups together to be able to benefit from each other,” Johnson said. “Job seekers will be able to benefit from working with an employer and also employers will be able to benefit from getting employees and hiring from the unhoused community. It’s a win-win for everybody.”

Since this is a fairly new program, many employers are still not aware that the tax credit exists. Both Yolo County and the City of Sacramento have been holding webinars for interested employers to learn about the benefits available for them.

As of 2019, the population of individuals experiencing homelessness in Yolo County was at 655, with 29% residing in Davis. According to statistics from the county, this is a 34.4% increase from 2009. 

Foster and Johnson both believe that the HHTC is a promising initiative that will benefit people experiencing homelessness and will give businesses an incentive to hire individuals experiencing homelessness and pay them above the minimum wage. 

Written by: Sofia Biren — city@theaggie.org

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