Mapping Working Family Tax Credits and Their Anti-Poverty Impact. Brookings Institution. Elizabeth Kneebone and Cecile Murray. February 21, 2017
Now that tax filing season is well under way, millions of Americans are about to begin receiving refunds. For many low-income taxpayers, two key tax code provisions—the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC)—will keep them and their families from falling into poverty.
What makes the EITC and ACTC special is that they are refundable—that is, after offsetting taxes owed, filers receive the remainder of the credit in their refunds. As a result, the tax credits effectively boost the take-home pay of low- and moderate-income working families. According to the U.S. Census Bureau’s Supplemental Poverty Measure (SPM)—a more nuanced measure of poverty that accounts for things like tax payments, work expenses, and in-kind benefits not reflected in the official measure—these tax credits lowered the national poverty rate by 3 percentage points in 2015, equivalent to lifting 9.2 million people above the poverty line. [Note: contains copyrighted material].
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