June 16, 2021

The Rockefeller Foundation: The Untold Benefits of State EITCs on Child Welfare

ITEP Work in Action

With the passing of the American Rescue Plan in March, more than 5 million children are projected to be lifted out of poverty this year, cutting child poverty by more than half, through Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) expansions. But what about state tax codes? What can states do to contribute to the fight against poverty, fill federal funding gaps, and create more equitable tax regulation?

Thirty states plus the District of Columbia and Puerto Rico have passed state EITCs, mostly as a percentage of the federal credit. Credits range from 3 percent to 85 percent of the federal; some states extend eligibility to groups like workers without children in the home; and some states provide the maximum credit value to workers with lower incomes instead of phasing it in.

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