Flush with cash, more than two dozen states enacted tax breaks in 2021, including earned income tax credits, or EITCs, a boon for low to moderate earners.
Generally, working families with children earning roughly $42,000 to $57,000 qualify for state EITCs, depending on marital status and family size, according to the Center on Budget and Policy Priorities, with the largest benefit typically going to those making around $11,000 to $25,000.
“State EITCs cost a heck of a lot less than rate cuts because only so many people benefit from them,” said Richard Auxier, senior policy associate at the Urban-Brookings Tax Policy Center.
In 2021, Colorado, Connecticut, Delaware, the District of Columbia, Indiana, Maine, Maryland, Minnesota, Missouri, New Jersey, New Mexico, Oklahoma, Oregon and Washington, added or expanded EITCs, with some going into effect for future tax years, according to the Tax Policy Center.
While the federal EITC is refundable, meaning it reduces tax bills or provides a refund regardless of liability, some state-level EITCs are nonrefundable, covering only up to taxes owed.