Refundable Tax Credits
Income and work supports may be provided through the tax system as well as through benefit programs. The most important tax credits for low-income households are the refundable Earned Income Tax Credit and the Child Tax Credit (credits that together lifted an estimated 8.7 million people out of poverty in 2011), and the partially refundable American Opportunity Tax Credit, which reduces the cost of postsecondary education. These credits were improved by the 2009 American Recovery and Reinvestment Act, and these improvements were extended through 2018 by the American Taxpayer Relief Act of 2012.
Highlighting State EITC Efforts on Tax Day
It’s tax day and for many months now, Volunteer Income Tax Assistance (VITA) sites across the country have assisted working families with their taxes in time to meet today’s deadline. By filing taxes, many low wage workers and families are able to get important refundable tax credits. Among these is the Earned Income Tax Credit (EITC), one of the largest anti-poverty programs having reached more than 27 million families and individuals in 2012 and that has far-reaching work, income and health benefits for its recipients. In fact, EITC lifted 6 million people out of poverty in 2011, according to the latest Supplemental Poverty Measure.
Because of the federal EITC program’s proven anti-poverty success, many states have adopted similar state-level Earned Income Tax Credits added onto the federal EITC. Low-income families and individuals who are eligible for the federal EITC are also eligible for the additional state EITC. Currently, 26 states provide a state EITC, 23 of which provide a refundable or partially refundable EITC. In facing tough budget decisions, however, many states have turned to the EITC as a place to cut costs while other states are pushing for improvements to their state programs.
- Elizabeth Lower-Basch and Julie Strawn | Apr 15, 2013 Comments on Education and Family Tax Benefits
- Helly Lee | Feb 04, 2013 Research Shows Long-Lasting Benefits of EITC
- Elizabeth Lower-Basch | Apr 08, 2008 Tax Credits and Public Benefits: Complementary Approaches to Supporting Low-Income Families
- Elizabeth Lower-Basch | Jun 27, 2012 Hearing on How Welfare and Tax Benefits Can Discourage Work
- Lavanya Mohan | Jan 24, 2013 National EITC Awareness Day: Spread the Word
- Lavanya Mohan | Apr 30, 2013 CLASP Work Supports Newsletter - April 2013
- Elizabeth Lower-Basch, Julie Strawn, and Patrick Reimherr | Apr 15, 2013 Comments on Education and Family Tax Benefits
- Lavanya Mohan | Mar 29, 2013 CLASP Work Supports Newsletter - March 2013
- Helly Lee | Jan 24, 2013 Research Shows Long-Lasting Benefits of EITC
- Elizabeth Lower-Basch | Jul 11, 2012 Testimony for the Record: Plateaus, Cliffs and Work Incentives