Fact Sheet: April 19, 2013

The Earned Income Tax Credit and Refundable Child Tax Credit in Rural America

PDF of this fact sheet (2 pp.)

In 2010, 22.9 percent of rural tax filers — compared with 20 percent of filers nationwide — claimed the Earned Income Tax Credit (EITC), according to research by the Brookings Institution and the Carsey Institute.[1]   This difference reflects rural areas’ generally lower wage levels.  The EITC brought $10.5 billion in benefits to rural America in 2010, an average of $2,245 for nearly 4.7 million rural EITC filers.

The share of rural EITC filers that also receive the refundable portion of the Child Tax Credit (CTC) has grown in recent years as well, the researchers found.  The refundable portion of the CTC provided these rural children and families with more than $3 billion in 2010 — important support for the 2.8 million beneficiaries, as well as the rural communities in which they live.

Similarly, one in three rural tax filers received either the EITC or the CTC (including both the refundable and nonrefundable portions) in 2008, an earlier Agriculture Department study found.[2]   These two credits provided these rural tax filers with a 13-percent increase in after-tax income, on average, for a total of $20.6 billion for families in rural communities.

A “larger share of rural tax filers [than urban filers] benefit from the EITC and the CTC,” the Agriculture Department study notes.  In 2008, 21.6 percent of rural filers received EITC benefits, compared with 16.9 percent of filers in metro areas, and the refundable portion of the CTC reached 13.9 percent of rural filers, compared with 12.6 percent of metro filers.  Rural areas’ lower incomes and higher poverty explain the difference, the study found:  in 2008, rural filers had an average adjusted gross income (AGI) of $43,616, compared with $60,841 for metro filers, and a larger share of rural filers had AGI below $50,000.  Due in part to the large numbers of low-wage jobs in rural areas, 15.1 percent of the rural population lived below the official poverty line in 2008, compared with 12.9 percent of the metropolitan population.

The EITC and CTC kept 1.4 million rural Americans, including 700,000 children, above the poverty line in 2011, based on the federal government's new Supplemental Poverty Measure.[3]

Table 1
Percentage of Tax Filers Claiming EITC, 2010
  All Rural
United States 20.0 22.9
Alabama 27.9 30.8
Alaska 13.8 15.7
Arizona 21.9 29.8
Arkansas 27.2 30.2
California 19.9 19.1
Colorado 15.9 17.9
Connecticut 12.5 11.7
Delaware 17.6 19.9
Florida 23.7 24.9
Georgia 27.8 34.1
Hawaii 17.8 20.2
Idaho 21.5 22.4
Illinois 17.7 18.3
Indiana 18.9 19.0
Iowa 15.4 16.3
Kansas 17.4 19.5
Kentucky 22.8 26.8
Louisiana 29.3 33.1
Maine 17.0 19.7
Maryland 15.4 16.4
Massachusetts 12.6 12.3
Michigan 18.7 18.5
Minnesota 13.8 16.3
Mississippi 35.2 39.0
Missouri 20.3 24.7
Montana 18.7 19.2
Nebraska 16.4 17.6
Nevada 19.6 16.1
New Hampshire 12.4 14.3
New Jersey 14.0 (no rural areas)
New Mexico 25.7 30.1
New York 19.6 19.1
North Carolina 23.3 27.0
North Dakota 13.7 14.3
Ohio 18.4 19.5
Oklahoma 23.8 26.3
Oregon 17.0 20.5
Pennsylvania 15.4 16.1
Rhode Island 16.3 (no rural areas)
South Carolina 26.0 31.3
South Dakota 17.3 18.3
Tennessee 25.0 27.5
Texas 26.3 28.9
Utah 18.2 20.8
Vermont 15.0 16.3
Virginia 17.1 23.2
Washington 14.7 17.5
West Virginia 21.2 23.2
Wisconsin 14.4 15.2
Wyoming 14.8 14.3
Source:  Marybeth J. Mattingly and Elizabeth Kneebone, “Share of Tax Filers Claiming EITC Increases Across States and Place Types Between 2007 and 2010,” Carsey Institute Issue Brief No. 57, December 2012, http://carseyinstitute.unh.edu

End notes:

[1] Marybeth J. Mattingly and Elizabeth Kneebone, “Share of Tax Filers Claiming EITC Increases Across States and Place Types Between 2007 and 2010,” Carsey Institute Issue Brief No. 57, December 2012, http://carseyinstitute.unh.edu.

[2] Ron Durst and Tracey Farrigan, “Federal Tax Policies and Low-Income Rural Households,” USDA Economic Information Bulletin Number 76, May 2011, http://www.ers.usda.gov/media/127516/eib76.pdf.

[3] CBPP analysis of Census Bureau data from the March 2012 Current Population Survey and SPM public use file.

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