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New Tax Proposals Would Help Low-Income Same-Sex Couples

Pride month is a good time to highlight proposals that would help low- and modest-income lesbian, gay, bisexual, transgender, and queer (LGBTQ) individuals and families make ends meet. The Working Families Tax Relief Act, introduced earlier this year in the Senate by Senators Sherrod Brown, Michael Bennet, Richard Durbin, and Ron Wyden, and 42 co-sponsors, and in the House by Representatives Dan Kildee and Dwight Evans, would increase after-tax income for roughly 1 in 4 cohabiting same-sex couples by strengthening the Earned Income Tax Credit (EITC) and Child Tax Credit.

Of the over 1 million cohabiting same-sex couples in the United States, more than 230,000 would benefit from the bill, roughly evenly split between couples who have dependent children and those who do not, our analysis finds. We used the 2018 Current Population Survey (CPS) Annual Social and Economic Supplement — which for the first time included questions regarding same-sex couples — to examine the income and taxes for those who identify as either married or unmarried same-sex couples residing in the same household.

The CPS data don’t provide information on LGBTQ-identified individuals who don’t have cohabiting partners. Although we cannot determine the exact number of LGBTQ individuals who would benefit, the EITC and Child Tax Credit expansions would also help many LGBTQ adults who are single or who don’t reside with their partners, and it would assist LGBTQ children in families where the parents do not identify as LGBTQ.

The Working Families Tax Relief Act would increase the EITC for families with children by roughly 25 percent. It would also make the Child Tax Credit fully refundable so children in the poorest households would receive the full credit, and it would create a larger, fully refundable Young Child Tax Credit for children under age 6. Consider a family where one father works as an auto mechanic making $45,000 a year, while the other cares full time for their 5-year-old son and 3-year-old daughter. The bill would increase their EITC by about $1,460. They would also receive an additional $2,000 from the Young Child Tax Credit, for a total gain of about $3,460.

By substantially increasing the EITC, the bill would also help working LGBTQ adults who aren’t raising dependent children. It would raise the maximum EITC for working childless adults — the lone group that the federal tax code now taxes into, or deeper into, poverty — from roughly $530 to $2,070 and raise the income limit to qualify for the credit from about $16,000 for a single individual to about $25,000. It would also expand the age range of eligibility for the tax credit from 25 to 64 years old to 19 to 67 years old.

A single LGBTQ adult without children who earns poverty-level wages in 2019 ($13,340) only receives a federal EITC of about $170 under current law. After paying federal income and payroll taxes, their income falls below the poverty line. Under the Working Families Tax Relief Act, their EITC would rise by $1,630, and they would no longer be taxed into poverty.

The House Ways and Means Committee recently passed legislation that would expand for two years the EITC and Child Tax Credit in ways similar to the Working Families Tax Relief Act.

The Ways and Means Committee also passed legislation that would specifically address two important issues regarding the tax code’s treatment of same-sex couples. That legislation, introduced by committee member Judy Chu, would amend the tax code to use gender-neutral language in describing couples and spouses, affirming the equal worth and dignity of same-sex couples under the law. It would also allow same-sex couples who were married under state law before they could file joint federal tax returns to amend their past returns to reflect those marriages.