Policy Brief provides an overview of Federal & State Earned Income Tax Credits and recommendations to Lawmakers for improvements

INDIANA – Wednesday, the Indiana Community Action Poverty Institute released a new policy brief on the Earned Income Tax Credit (EITC). The federal and state EITCs are available to most low- to moderate-income working families and individuals, and function as a wage subsidy by boosting earnings as workers increase their hours, which encourages work. 

In 2018, the federal credit lifted approximately 5.6 million people out of poverty, including about three million children. The most recent analysis of the Indiana credit found that the state credit reduced the number of Hoosier households living in poverty by 2.2 percent. 

Federal and state lawmakers should enact changes to both credits that (1) ensure parity between the treatment of childless workers and those with children, (2) eliminate “marriage penalties,” and (3) drive higher participation. 

Read the Institute’s EITC Policy Brief