New Report Recommends CTC and EITC Expansions to Help Rural Communities

By: Juan Tirado

A new report recommends temporarily expanding both the federal Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) to target financial aid in rural communities.

In the Center on Budget and Policy Priorities’ (CBPP’s) new report, researchers recommend temporarily making the CTC fully refundable to reach workers with the lowest income and increasing the value of the EITC for workers without dependent children. The current CTC is worth up to $2,000 per child, but millions of children are excluded from receiving the full credit because their household income is too low. This provision excludes a higher percentage of households in rural areas, where salaries are typically lower than in metro areas. By making the credit fully available, households with little to no income would still be able to claim the credit. CBPP estimates that this expansion would benefit almost 4.3 million children in rural communities.

People living in rural areas are also more likely to claim the EITC than those living in metro areas. Currently, the EITC provides little to no benefit to workers without dependent children, making them to only group of workers taxed further into poverty by the U.S. tax code. The report recommends raising the maximum EITC for workers without dependent children from $530 to $1,500 and raising the income limit to qualify for the credit from $16,000 to just above $21,000. This expansion would disproportionally affect rural workers, benefiting approximately 2.4 million workers without dependent children.

Overall, these expansions would benefit an estimated 10.4 million rural residents, providing them with a much-needed stimulus at a time when many are struggling to stay afloat. Both provisions have been included in the U.S. House of Representatives’ recently passed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.

Read the full report here.