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Tax Season: Time to Help the Lone Group Taxed Into Poverty

Millions of working families will file their taxes by April 15, and some will claim the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).  These credits lifted 31.7 million people above or closer to the poverty line in 2013.  This pro-work success story, however, largely leaves out one group: adults without children and non-custodial parents.

The EITC for “childless” workers misses many completely and provides only minimal help to others.  All childless workers under age 25 are ineligible for the credit, and the average credit in 2012 for eligible workers between ages 25 and 64 was only about $270 — less than one-tenth the average $2,970 credit for filers with children.  A childless adult working full time at the minimum wage (earning $14,500) will pay $1,506 in federal income and payroll taxes in 2015 — a substantial tax burden for someone with such low income — after receiving an EITC of just $23.

As a result, childless adults are the only group that the federal tax code taxes into — or deeper into — poverty.

President Obama and House Ways and Means Chairman Paul Ryan have advanced important proposals to address this problem and, as Chairman Ryan has said, his proposal “basically mirrors the president’s proposal.”  Several Democratic senators and representatives also have introduced key proposals.

The Obama and Ryan proposals would lower the age floor from 25 to 21 and expand the EITC for childless workers by doubling its phase-in rate, from 7.65 cents per added dollar of income to 15.3 cents (to fully offset workers’ payroll taxes on this income).  And they would raise the income levels at which the credit starts phasing out and phases out completely, as our paper explains.

These changes would make a big difference for childless workers (see interactive graphic, below).  Policymakers should enact these proposals and extend this important tax credit to more childless workers.