Earned Income Tax Credits On The Rise

There is a bipartisan trend toward creating or expanding matching programs tied to the federal earned income tax credit (EITC), reports GoverningNew Jersey, Oregon and Rhode Island all expanded their programs this year, and only a few eliminated or cut back their programs to make ends meet during the recession. From the article:

State matches act as a small boost to the federal EITC, which lets low-income workers apply a credit against the taxes they owe. If the credit is worth more than their taxes, workers get to collect the difference. In 2015, about 28 million Americans benefited from nearly $66 billion in refunds from the federal EITC program. Most of the recipients are parents with dependent children.

Twenty-six states and the District of Columbia offer an additional credit, ranging from a 3.5 percent match in Louisiana to a 40 percent match in Washington, D.C.

The EITC is a rare antipoverty program that has enjoyed a long history of bipartisan support. The national poverty rate has been stuck at about 15 percent for the past four years and is higher than at any point in two decades. Economic research suggests that the EITC encourages single mothers to work and to increase their incomes over time. Seven consecutive presidents, including President Obama, have expanded the federal credit in some way.

Maryland increased its percentage match of the federal credit from 25 percent to 26 percent since 2013, and has scheduled several years of increases to reach 28 percent by 2018, Governing reports. This year, states considered more than 170 EITC-related bills, according to the National Conference of State Legislatures. Twenty-six states and the District of Columbia offer a percentage match to federal earned income tax credit program.