The federal Earned Income Tax Credit (EITC) is a federal tax credit for working people with low and moderate earnings. The EITC provides workers with a tax credit that is applied to some or all of a worker’s federal tax obligation, and thus can serve as a supplemental source of income. The EITC is currently targeted towards workers who are raising children, with eligibility depending on the worker’s income, marital status, and number of children. State EITCs provide an additional benefit to families by reducing their state income tax liability.
Research has found that children who are beneficiaries of greater state or federal EITCs obtain better test scores, compared to similar families who are receiving lesser amounts.
For this indicator, states were counted as having the policy if states had enacted a law regarding EITC, even if it has not yet gone into effect. Data are as of 2021.
Tax Credits for Workers and Their Families (2018). State tax credits. http://www.taxcreditsforworkersandfamilies.org/state-tax-credits/ National Conference of State Legislatures. (2019). Tax credits for working families: Earned Income Tax Credit (EITC). https://www.ncsl.org/research/labor-and-employment/earned-income-tax-credits-for-working-families.aspx
Marr, C., Huang, C. C., Sherman, A., & Debot, B. (2015). EITC and Child Tax Credit promote work, reduce poverty, and support children’s development, research finds. Center on Budget and Policy Priorities. https://www.cbpp.org/research/federal-tax/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens
Urban Institute. (2021). State Earned Income Tax Credits. https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/state-earned-income-tax-credits