State-Level Tax Credits Can Help Improve Child Well-Being

By Devin Simpson

States working to reduce child poverty and increase the overall well-being of their youngest residents should look to tax credits for workers and their families, according to a recent report.

The Annie E. Casey Foundation’s annual KIDS COUNT data book ranks the well-being of children across all 50 states. The report evaluates how children are faring across four domains: economic well-being, education, health, and family and community. This report has sparked conversation about how state and federal policymakers can work to lower the child poverty rate across the United States.

The report makes a strong case for tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), programs that increase economic stability for low-wage families by helping workers keep more of what they earn. States that offer their own version of the federal credits are more likely to rank higher in overall child well-being than states that do not. This year, New Hampshire ranked the highest, while Mississippi ranked the lowest for the third consecutive year.

According to the Center on Budget and Policy Priorities, the EITC and CTC lifted 5.1 million children out of poverty and made 8 million children less poor in 2015, an increase from 2014. The credits help parents invest in their children’s future by making quality education and healthcare more affordable. Research has linked the EITC specifically to higher infant birth weights, improved academic performance and increased college enrollment among children of recipients.

For a full list of which states offer their own versions of the federal EITC and CTC, visit our website.