State EITC Programs Provide Important Relief to Families in Need

Abstract

In this brief, authors Douglas Gagnon, Marybeth Mattingly, and Andrew Schaefer discuss the estimated effects of state Earned Income Tax Credit (EITC) benefits on rates of poverty in 2010–2014 using the Current Population Survey Annual Social and Economic Supplement. They report that, on average, individuals in states with refundable state EITCs receive a 17.6 percent match of their federal EITC benefit, and the state supplement pulls an estimated 0.3 percent of these states’ combined populations out of poverty. Children receive the greatest benefit, as state EITCs reduce child poverty by 0.7 percentage point overall. Even those who remain poor after receiving state EITC benefits get a sizeable boost: on average these families receive $455, which amounts to 2.4 percent of their total family earnings. The authors also examined state EITC receipt by family characteristics, finding larger average benefits for metropolitan and non-white- and Hispanic-headed households. Arizona, Arkansas, Georgia, Nevada, and Texas would experience the greatest estimated reductions in child poverty rates if they were to adopt a state EITC