Living a 'car-free' life in California could soon save you $1,000 on your tax bill

• Low-income Californians are set to receive a $1,000 tax credit for not owning a car.
• The initiative is among the several climate measures the state has passed in recent weeks.

In California, those living car-free lives won't just save money on gas — they could see a lower tax bill.

New California legislation would offer individuals earning up to $40,000 a year a refundable tax credit of $1,000 — as long as they don't own a vehicle. The threshold would rise to $60,000 for joint-filers.

The bill — which includes several other climate measures — has passed the state's legislature and is awaiting Gov. Gavin Newsom's sign off. It follows California's recent decision to ban the sale of new gasoline-powered vehicles beginning in 2035.

As well as incentivizing Californians to ditch cars, the bill is targeted to benefit lower-income individuals, many of whom are struggling with inflation.

Cassie Horton, a 34-year-old Los Angeles resident, has lived a car-free life for the past year while living in New York and Chicago. She previously told Insider that the experience has been "transformational" and that she plans to continue her lifestyle when she returns to California this September.

"I've got more money in my wallet but I also just feel like my life is better as a result," Horton said. "And then when you add kind of the environmental upside as well on top of that, that whole package is really compelling."

Horton is among many millennials taking steps towards car-free — or car-lite — lives. In June, the average monthly car payment reached a record-high of $712. Even in 2018, before prices spiked, a majority of millennials surveyed by Chicago-based Arity said owning a car was not "worth the investment."

For lower-income Americans in particular, however, it might not be so easy to say goodbye to their cars — as many need them for their commutes.

Per a June WFH Research survey of over 21,000 Americans, 15% of full-time employees are fully remote, 30% are hybrid, and the remaining 55% are on-site full-time. For the 45% of Americans who are working remotely at least part of the time — and commute less often if at all — embracing the car-free lifestyle has become increasingly attractive.

But the majority of Americans are commuting daily, and they're disproportionately likely to be lower-income.

Among households with annual incomes of $200,000 or more, 73% reported that someone in their household teleworked some or all of the time since the pandemic began, according to 2021 Census Bureau data. This figure fell to 32% and 13% respectively for households making between $50,000 and $75,000 and under $25,000.

While some lower-income Californians may be able to pivot to public transportation, the state's public transportation has long been criticized as well — being described by some as underfunded, inaccessible, unsafe, and even flat out "the worst."

For some people, like Horton, who are motivated by the financial, environmental and quality of life improvements a car-free lifestyle can offer, navigating these challenges may be worth the effort. She said in July that to prepare for the challenge ahead of her, she was searching for bus routes and seriously considering purchasing an e-bike.

"I made this commitment to myself that even going back to LA, which is such a car-centric city, I'm not going to buy a car and I'm going to continue this lifestyle we've been able to build up and really experience during our time here," she said.