Governors and lawmakers in numerous states have proposed creating or expanding state Earned Income Tax Credits (EITCs) this year. By approving these proposals, states can build on the federal EITC’s well-documented, long-term benefits for children while improving racial and gender equity and thus the nation’s economic prospects.
Twenty-nine states plus the District of Columbia and Puerto Rico have created a state EITC to help low-wage working households meet basic needs (see map). States without EITCs should enact them, and those with EITCs should expand them — particularly states with non-refundable credits, which don’t give workers the full value of the credit they’ve earned if it exceeds what they owe in state income tax.
State EITCs help working families paid low wages afford the very things that allow them to continue working, like child care and transportation. They also help children from economically struggling families do better and go further in school because the additional resources help parents better meet their needs. By investing in an EITC, states can make a big difference for children and families and for their communities.