Just Taxes Blog by ITEP

More Than One in Three Young Workers Would Benefit from EITC Reforms in Build Back Better Plan

February 8, 2022

About 37 percent of workers without dependents between ages 19 and 24 will receive an average income boost of around $800 this year thanks to a temporary expansion of the Earned Income Tax Credit included in last year’s American Rescue Plan Act (ARPA). 

Although the EITC expansion did not receive as much attention as the expanded Child Tax Credit, a new ITEP report shows the positive impact of allowing young workers without children in the home to maintain access to one of the nation’s most significant and effective anti-poverty programs.  

The temporary enhancement under ARPA made the federal EITC available to younger and older workers without dependent children—19 through 24 and 65 and older—for the first time. It also increased the income cap and boosted the size of the EITC for all eligible working adults without children in the home. ITEP’s new analysis is limited to young workers.  

If Congress extends the temporary EITC reforms made under ARPA, 5 million young workers would benefit, receiving a combined income boost of nearly $4 billion in 2022. 

Without action, the EITC will return to a credit in which workers without children in the home receive little benefit. EITC income eligibility limits are set very low, and the available maximum credit is a mere fraction of what families with children can receive. Moreover, those 19 to 24 years of age who were eligible for the temporary expansion would no longer have access to the credit.  

The average benefit of $820 in 2022 is a meaningful sum for some young workers. Census data show that the conventional EITC lifts millions of families out of poverty every year, so extending its reach to young and older workers likely would benefit ineligible workers as well.  

Access to the EITC is particularly important for the 19- to 24-year-old population analyzed in this report. Young adults face the highest poverty rates of any age group in the United States and are in dire need of the added economic security that the credit can provide during this transformative phase of their lives. Notably, lawmakers in seven states have already recognized the important policy implications of this change and have lowered their minimum eligibility age for claiming their state-level EITCs.  

The accompanying state-by-state analysis, broken down by race and ethnicity, highlights the benefit we expect young workers without dependents to experience when they file their 2021 taxes.  But absent congressional action, this added benefit will be a one-time blip. These young workers deserve better. 


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