State-Level EITCs Can Help to Address Rural Poverty “Emergency”

By Lauren Pescatore

A new report on childhood poverty declares rural America to be in a state of “emergency” and calls on policymakers to invest in children.  The study adds to a growing body of research on the need to enact and expand state-level Earned Income Tax Credits (EITCs) and other policies that help children thrive.

Growing Up Rural in America, a complement to Save the Children’s annual End of Childhood Report, finds that rural child poverty rates are higher than urban rates in more than 85 percent of the 50 states. On average, one in four children in rural America lives in poverty compared to one in five children in urban areas. But in five states –  Arizona, Georgia, Louisiana, Mississippi and South Carolina – the rate of rural child poverty is even higher: at least one in three rural children is growing up in poverty.

The federal EITC helps more than 10 million Americans living in rural areas make ends meet each year. However, many states with high populations of rural taxpayers do not offer a state-level EITC on top of the federal credit. State-level credits, like their federal counterpart, help to reduce child poverty and are linked to improved health and educational outcomes for children in low-income families. Among the five states with the highest rates of rural filers claiming the federal EITC  – Mississippi (37.5%), Georgia (32.7%), Florida (29.3%), South Carolina (28.8%) and Louisiana (28.85%) – only two offer state-level EITCs. Louisiana’s credit is worth a relatively small percentage (3.5%) of the federal credit; and South Carolina’s EITC, though worth 125%, is nonrefundable, meaning those with the lowest incomes are ineligible.

Though the federal EITC reaches millions of rural taxpayers across the country, millions more may be eligible for the credit but not claiming it. Rural filers are among those most at risk of overlooking the EITC, likely due to limited access to tax assistance sites and other resources. In addition to enacting and expanding state-level EITCs, policymakers who want to invest in rural children could consider expanding access to free tax preparation services and “Virtual VITA” sites, which help rural taxpayers claim the EITC and other credits without needing to travel to a physical location.