2020 Was a Historic Year for Making State-Level Tax Credits More Equitable
By Devin Simpson
The COVID-19 economic downturn has thrown millions of Americans into financial instability. With statewide shutdowns and restrictions on businesses across the country, America’s low-income workers have struggled since March to keep lights on, bills paid, and food on the table. The Earned Income Tax Credit (EITC) has been highlighted by tax policy experts and researchers as a necessary component of any state or federal COVID-19 relief package. However, many groups – like young workers and workers filing with Individual Taxpayer Identification Numbers (ITINs) – are unable to claim federal and state EITCs, despite being among the groups most vulnerable to economic hardship. Last year, advocates in three states put a spotlight on these workers and pushed to ensure their state EITCs were more inclusive.
Successful state-level EITC expansions in 2020 included:
- California expanded the CalEITC’s eligibility to ITIN filers with children under the age of six in June. In September, the governor signed legislation to expand eligibility to all ITIN filers.
- Colorado expanded its EITC from 10 to 15 percent of the federal credit and expanded eligibility to all ITIN filers.
- New Jersey expanded its EITC from 39 to 40 percent of the federal credit and lowered the minimum age requirement for their credit from 25 to 21.
It is critically important to not only strengthen the credit, but to also ensure it is reaching the families that need it most. This year, two states launched statewide campaigns to increase EITC participation during the upcoming tax season.
- Illinois Governor J.B. Pritzker and the state’s Department of Revenue began an EITC outreach campaign targeting 22,000 eligible taxpayers that have not claimed the state credit.
- New Jersey Governor Phil Murphy’s administration and the state Treasury launched an outreach campaign with a new video and promotional materials to raise awareness about the credit and ensure filers claim it.
To learn more about the 2020 EITC campaigns in California and Colorado, read TCWF’s case studies. Working on an EITC campaign this year? Tell us about it here. Let’s work together to keep the EITC momentum going in 2021.