The Earned Income Tax Credit (EITC) is in the news as part of debates over how to reduce poverty and better help low-income childless workers, so we’ve prepared fact sheets with state-by-state data on how the EITC and the Child Tax Credit (CTC) reduce poverty, who benefits, and how state EITCs can supplement the federal credit. The fact sheets also cover who benefits from two proposals to strengthen the credits, including one to improve the EITC for childless adults and non-custodial parents.
The EITC, a refundable tax credit for low- and moderate-income workers, encourages and rewards work, offsets federal payroll and income taxes, and raises living standards. The CTC also helps low-income working families by offsetting part of the cost of child rearing.
Next to Social Security, the EITC combined with the refundable portion of the CTC constitutes the nation’s most powerful anti-poverty program. The credits lifted 10.1 million people, including 5.3 million children, out of poverty in 2012.
Twenty-six states, including the District of Columbia, have established their own EITCs to supplement the federal credit.