Members of Congress Seek Cosponsors for Bill that Would Extend, Strengthen and Simplify EITC

The sponsors of The Earned Income Tax Credit Improvement and Simplification Act of 2013 (H.R.2116), who introduced the bill this past May, are looking for co-sponsors as it makes its way through the House.  The bill, introduced by Rep Richard E. Neal (D-MA), has been referred to the House Committee on Ways and Means and currently boasts 44 cosponsors.  The Senate companion legislation (S.836), introduced by Senator Sherrod Brown (D-OH), has acquired 32 cosponsors and been referred to the Senate Committee on Finance. Both bills would extend, strengthen, and simplify the Earned Income Tax Credit (EITC) by making the 2009 enhancements to the bill permanent, broadening eligibility requirements and eliminating obstacles to qualify. These bills are not expected to move as stand-alone legislation. Their sponsors are trying to build support to include these improvements in the House and Senate tax reform bills.

The Recovery Act extended the EITC in 2009 to include a larger credit for families with three or more children as well as an increased credit for married couples who file jointly. Currently set to expire at the end of 2017, these expansions would become permanent under H.R.2116. In 2013, these expansions benefited more than 10 million people earning less than $50,000 a year.  

The bill would strengthen the EITC for childless adults (both single and married) by significantly increasing the phase-in and phase-out income levels for this group and decreasing the minimum age to qualify (from 25 to 21)for those who work more than part-time and are not claimed as dependents on any other tax returns, allowing more workers to become eligible for the maximum EITC. Currently, single childless adults who make a yearly income equivalent to the Census poverty line—a little less than $12,000/year in 2013—must pay almost $2,000 in federal taxes each year, making them the only demographic that’s taxed deeper into poverty by the federal tax system.

The final goal of the bill is to simplify the credit, making it easier to claim correctly. The bill would introduce the Abandoned Spouse Rule, eliminate the Investment Income Test, and streamline the Qualifying Child Credit Rules. Under current law, married parents only qualify for the EITC if they file a joint tax return. A separated parent must apply a complex head of household test to qualify. The Abandoned Spouse Rule would allow a separated parent who lives with his or her child for more than six months of the year, either lives apart from their spouse for the last six months or has a legally binding separation agreement and is living apart from the spouse at the end of the year, to file an individual return and still claim the credit.

The Investment Income Test currently disqualify low-income filers from claiming the EITC if they generate investment income of more than $3,300. This rule applies to very few potential recipients of the EITC, but makes the process for claiming the credit much more complex. This bill would eliminate the Investment Income Test, simplifying the filing process.

Finally, under the current Qualifying Child Credit Rules, if there are two adults, say a mother and grandmother, who inhabit the same household and are raising a child, only one can claim the child for the EITC, while the other no longer qualifies for the EITC in any form. This new bill would allow filers who are legally eligible to claim a child for the EITC but elect not to do so (presumably because another filer is claiming the dependent) to still qualify for the smaller childless worker EITC.

For more information on the bills and a full list of sponsors in the House and Senate, visit