This year, the Earned Income Tax Credit (EITC) turns 40. Happy Birthday EITC! To celebrate, here are 10 important things to remember about this vital support for working families.
- The EITC is a tax credit that encourages and rewards work—recipients are only eligible if they have earnings from work. Professor Kathryn Edin, a researcher who has conducted many interviews with EITC recipients over the years, states: “The EITC makes people proud. It makes them feel like Americans. It makes them feel like a part of the social fabric.”
- The EITC is a refundable tax credit, meaning that even if a family makes too little to owe any federal taxes, they are able to receive a refund from the EITC. This year, it is worth up to $6,143 for a family with three or more children and an income less than $46,997 ($52,427 if married filing jointly).
- The EITC is the largest, most effective anti-poverty program in the country for the non-elderly. In 2013, almost 28 million people received over $66 billion in EITC benefits.
- The average EITC in 2014 was $2,407 for a family, boosting monthly wages throughout the year.
- The EITC is particularly important to women, who typically earn less than men and are more likely to bear the expenses of raising children on their own. In 2013, the EITC lifted more than 5.3 million people out of poverty, including more than 2.7 million children and almost 1.5 million adult women.
- Research tells us that families most often use the EITC to pay for necessities, repair homes, and cars that are needed to commute to work–and in some cases, obtain additional education or training.
- Refundable tax credits like the EITC improve health and educational outcomes for children. Specifically, low-income kids whose families receive refundable tax credits are more likely to attend college and have higher earnings themselves [PDF].
- The EITC has contributed to increases in work among single mothers, with the additional effect of boosting their Social Security retirement benefits—critical to lowering women’s poverty in old age.
- In addition to the federal credit, twenty-four states offer their own EITCs that can offer even more support to working families who live there. (Want to know if your state is one of them)?
- The EITC has long received bipartisan support from lawmakers. President Ronald Reagan called it “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”
…and one to grow on: 1 in 5 EITC eligible individuals or families fail to claim the credit every year. It’s up to all of us to spread the word and make sure eligible families know about—and know how to claim—the EITC this tax season. The National Women’s Law Center has resources to help you get started today!