Earned Income Tax Credit (EITC): A Poverty-Reduction Strategy
January 25, 2023 by Gina Dwyer, MPH
Tax time is approaching. Though filing taxes is something most of us dread, this year it could mean money back in the pockets of many of those in our community, especially those with children. The Federal Earned Income Tax Credit (EITC) is the “largest poverty alleviation program for families with children in the US, and it has well-documented health effects”. (1) The EITC is a benefit for working people with low to moderate income that the federal government, many states (including Washington, DC), and some local communities offer. (2) In fact, DC’s EITC is now the most generous in the nation; eligible Washingtonians may claim both the federal and the DC EITC. To see if you qualify, check here.
Every year, millions of working Americans and their families are lifted out of poverty by claiming the federal credit, however, about 1 in 5 families do not claim it despite their eligibility. In DC, this figure is closer to 1 in 4 families, or 25% of eligible taxpayers missing out on this credit. (3) Reasons for this are not always clear, though some studies suggest it comes down to lack of awareness. (1) The anti-poverty effects of this credit are so clear, and the health benefits so obvious, that the Centers for Disease Control and Prevention considers the EITC one of fourteen key evidence-based cost-effective interventions that have been shown to improve health within just five years.1 These benefits are particularly apparent for single mothers and their children.
Studies have assessed the effects of EITCs on maternal health behaviors and infant health outcomes and found that more generous EITCs are associated with reduced maternal stress and increased birth weight, among other benefits. (1)
These benefits are also greater for Black women and women of color. A 2019 study published two important findings:
- 23 states with an EITC saw a connection between EITC and reduction in low birthrate by 4 to 11%. (4)
- States with the greatest reductions in low birthweight rates and greatest increases in birthweight all had refundable tax credits. (4)
There is no doubt that this credit is important to the health and well-being of our community, but how can hospitals and community organizations raise awareness of the EITC? On Friday, January 27, 2023, the IRS is sponsoring the 17th annual EITC Awareness Day and encouraging us all to participate in a social media blitz. (5) The blitz amplifies the message about the importance of claiming the EITC among those we serve. The IRS has provided a variety of EITC promotional material in different languages and for target audiences on this site. Simply posting information to your social media accounts may encourage people to seek this credit. You can also direct patients, families, and clients to a local VITA site or other free tax preparation sites. In the District, free Community Tax Aid sites are also available. Tax filers can also file for free at https://www.getyourrefund.org/en. In an earlier blog, we also stressed the importance of claiming the Child Tax Credit (CTC) for those who are eligible. Families may be able to claim both.
- Hamad R, Gosliner W, Brown E, et al. Understanding Take-Up of the Earned Income Tax Credit Among Californians with Low Income. Health Affairs. 2022; 41 (12): 1715-1724. doi: 10.1377/hlthaff.2022.00713
- Markowitz S, Komro K, Livingston M, et al. Effects of state-level Earned Income Tax Credit laws in the U.S. on maternal health behaviors and infant health outcomes. Social Science & Medicine, 2017;197:67-75.
- Internal Revenue Service. EITC Participation Rate by States Tax Years 2012 through 2019. Earned Income Tax Credit & Other Refundable Credits. https://www.eitc.irs.gov/eitc-central/participation-rate-by-state/eitc-participation-rate-by-states. Published 11/16/22. Accessed 1/23/23.
- Centers for Disease Control and Prevention. Earned Income Tax Credits. https://www.cdc.gov/policy/opaph/hi5/taxcredits/index.html#:~:text=What%20is%20an%20Earned%20Income,and%20some%20local%20communities%20offer.&text=It%20is%20designed%20to%20incentivize,particularly%20for%20families%20with%20children. Published 12/15/22. Accessed 1/23/23.
- Internal Revenue Service. EITC Awareness Day. Income Tax Credit & Other Refundable Credits. https://www.eitc.irs.gov/partner-toolkit/eitc-awareness-day/eitc-awareness-day-2. Published 1/6/22. Accessed 1/23/23.
About the author
Gina Dwyer, MPH
Lead Public Health Data Analyst for the Child Health Data Lab within the Child Health Advocacy Institute at Children's National Hospital