The Earned Income Tax Credit (EITC)
The EITC is a federal tax credit primarily available to low-wage workers with children. State policymakers can significantly increase the dollars in families’ pockets through the following EITC-related policies and actions:
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Expand federal EITC outreach
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A significant number of eligible filers are not aware of the federal EITC, and as a result these taxpayers and the local and state economies in which they live lose millions of federal revenue dollars each year. State outreach efforts boost resources for working families and contribute to state economic growth.
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Enact a state EITC
. Enacting a state EITC benefits children, families and local and state economies.
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Maximize the impact of the state EITC
. State policymakers can maximize tax relief for low-income working families by making the state EITC refundable and by adjusting the amount of the credit as a percentage of the federal EITC.
Call-Out Box #1
Reducing Poverty with the EITC
The EITC is considered one of the most successful policies for lifting children out of poverty. Currently, 24 states offer a state EITC. (LINK TO PAGE 22)
Call-Out Box #2
Offering EITC in All Tax Environments
Washington State demonstrates that an EITC can work even in states without a broad-based state income tax. Three local jurisdictions also offer a local version of the EITC.