Untapped Potential: State Earned Income Credits and Child Poverty Reduction


By Amy Bracken

This research brief says the federal Earned Income Credit (EIC) lifts 2.5 million children out of poverty, and thousands more could be lifted from poverty if more states adopted a refundable EIC, and if states that already have such tax policies made them more generous.



Fifteen states and the District of Columbia have EIC (an income tax credit for low-wage earners), 10 of which have refundable EICs – meaning that recipients get the full amount of the tax credit even if that amount exceeds their state income tax liability. (The brief describes the nonrefundable EIC as having virtually no value to working poor families.)


NCCP projects the impact that a nationally expanded refundable EIC would have on working poor families. It says over 300,000 more children could be lifted from poverty if the nation’s most populous states, Texas and California, enacted refundable EICs. (Neither state currently has a state EIC). If all 12 of the most populous U.S. states had such a credit, according to NCCP, 700,000 more children would be lifted from poverty. Presently only two of these states, New Jersey and Illinois, have refundable state EICs.


This is the third in a series of NCCP research briefs focusing on poverty dynamics in the 50 states and D.C. Funding for the report was provided by the Annie E. Casey Foundation. Six pages. Free. National Center for Children in Poverty, Mailman School of Public Health of Columbia University, 154 Haven Ave., New York, NY 10032. (212) 304-7100.  


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