New Research Urges States to Expand EITC to Workers Without Dependent Children
By Juan Tirado
The case for expanding the Earned Income Tax Credit (EITC) to younger and older workers continues to grow with new research from the Institute on Taxation and Economic Policy (ITEP).
While the EITC is considered one of the most effective anti-poverty tools in the tax code, the credit’s design leaves out noncustodial parents, young workers new to the job market, and older workers who need to keep working past the traditional retirement age.. A recent report from ITEP offers three recommendations for how states can enhance their EITCs to address the issues affecting these workers.
The report urges lawmakers to expand the age eligibility for the EITC to include 18-24-year-old workers without dependent children and workers ages 65 and older. The researchers from ITEP also suggest expanding the existing state credits to 100 percent of the federal credit for all workers without dependent children.
According to the Center on Budget and Policy Priorities (CBPP), more than 5 million workers without dependent children are taxed into, or deeper into, poverty by the federal tax code. At the federal level, workers without dependent children only receive a credit of $291, while workers under 25 and over 64 receive no benefit from the credit. States such as California, Maine, Maryland, and Minnesota have already taken steps to decouple their eligibility requirements from the federal credit by expanding their age limits. The District of Columbia and Maine have increased the value of their credit for workers without dependent children.
In line with these suggestions from ITEP, there have been proposals in Congress to expand the credits to these workers. The Working Families Tax Relief Act of 2019 would address several of the gaps in the federal EITC impacting these groups. The legislation would boost the value of the EITC for childless adults from about $530 to $2,070, increase the income phase-out rate from $15,570 to almost $25,000, and expand the eligibility age range to 19-67. The CBPP estimates that these changes would reduce the number of people currently being taxed into, or further into, poverty from over 5 million to less than 100,000.
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