To mark Earned Income Tax Credit (EITC) Awareness Day, which is today, we’ve issued three pieces related to the EITC and its sibling, the Child Tax Credit — two key federal tax credits that help millions of low- and moderate-income workers make ends meet.
Our updated backgrounder on the EITC, which roughly 28 million working families and individuals receive, explains what it is, who’s eligible, and how it encourages and rewards work. We’ve added a calculator (see below) to show the benefit amounts for various family types and income levels.
Half of the states (see map) have created their own state EITCs to build on the success of the federal credit and most of them are refundable, meaning that families whose credit exceeds their income tax liability receive the difference as a refund. Our new paper reviews recent state EITC developments and explains why adopting or expanding a state EITC can make a big difference in the lives of working families.
Our updated backgrounder on the Child Tax Credit (CTC), which helps working families offset the cost of raising children, explains both its eligibility rules and recent bipartisan improvements. The CTC and EITC together lift 10 million people out of poverty, including 5 million children (see graph).