New Research Highlights EITC’s Impact on Young Parents

By Devin Simpson

A new research brief from the University of New Hampshire’s Carsey School of Public Policy points to the Earned Income Tax Credit (EITC) as one of the most effective safety-net programs for young parents.

The brief, The Poverty-Reducing Effects of the EITC and Other Safety Nets for Young Adult Parents, found that the federal credit is the most widely-used program among this demographic and the most effective at reducing poverty.  Jessica Carson, research assistant professor at the Carsey School, found that young parents face higher rates of poverty than young adults without children and older parents. A larger share of young parents claim the federal credit each year, which goes twice as far in reducing poverty for that group compared to others.  In addition to the EITC, Carson examined participation in SNAP, WIC, energy assistance, free or reduced-price school lunch, and housing subsidies.

There is a growing body of research examining the increased financial hardships facing young parents. In 2018, the Annie E. Casey Foundation released a report, Opening Doors for Young Parents, which offered solutions for addressing the barriers young parents face. The report found that although most young parents work full or part time, their median income is only $23,000, making income-boosting programs like the EITC critical for their families.

Carson highlighted specific gaps in the EITC that limit its impact on poverty, mainly the age eligibility requirements, low value for workers without dependent children, and its structure, which only allows families to claim it annually. She noted that in situations like the current COVID-19 pandemic, workers may receive less from programs connected to work as industries shut down and lay off low-income workers. Carson recommends that policymakers and advocates invest more heavily in EITC outreach and expansion to increase its impact on younger parents and their children.

Read the full report here.