Fourteen states have enacted a child tax credit, and 31 states plus the District of Columbia and Puerto Rico have enacted their own version of the federal Earned Income Tax Credit (EITC). State child tax credits and EITCs build on the success of both federal credits by helping families afford the basics and reducing poverty, in turn helping them thrive in the long run through improved child and maternal health, school achievement, and other benefits, research has found. Because people of color, women, and people who immigrated to the U.S. are overrepresented in low-paid work and in families with little to no earnings — due in part to discrimination, bias, and other structural barriers to opportunity — these two state credits are an important tool for advancing equity. And by bolstering families’ incomes, they also boost local communities and state economies.
These credits are among several income assistance policies such as guaranteed income programs and Temporary Assistance for Needy Families that provide families with a stronger foundation and begin to address income-related racial inequities. Unrestricted and unconditional cash gives families the autonomy to best address their individual needs while ensuring they can buy necessary items, like diapers and personal hygiene products, that other safety net programs don’t cover.
Lawmakers in states without their own child tax credit or EITC should enact them. States that have limited their credits should make these credits refundable. States should also expand their credits to those left out of each federal credit, particularly by ending exclusions for people who are immigrants who do not have a Social Security number.
Center on Budget and Policy Priorities | cbpp.org
