NC Budget and Tax Center

Legislatures across the country see EITC expansion legislation

The New Mexico legislative session came to a close last week with a tax policy bill that included an expansion of the New Mexico state version of the Earned Income Tax Credit from 10 percent to 17 percent of the federal credit.

The Earned Income Tax Credit (EITC) is considered an especially effective policy mechanism for driving down poverty. As a result, a number of state legislatures have seen bills during the 2018 and 2019 legislative sessions that have sought to increase the percentage value of their complementary state credit.

The Michigan legislature is considering two such bills. HB 4298 seeks to increase the Michigan state EITC from 6 percent to 20 percent of the federal credit. HB4324 would seeks to increase that percentage to 30 percent of the federal credit.

A bill recently introduced in the Delaware legislature is a hybrid of refundable and nonrefundable EITC. The bill is designed to give recipients a choice between a fully refundable credit at 4.5 percent of the federal credit, or a nonrefundable 20 percent credit.

Ohio Governor Mike DeWine signed legislation to increase the state EITC from 10 percent to 30 percent of the federal credit.

2018 was marked with EITC expansion in six states. California, and Maryland sought to expand their state EITCs through increased accessibility across populations. Maryland now has no minimum age requirement for EITC filers. Single California filers age 18-24 without dependent children, along with single filers older than 65 without dependent children are now eligible to claim the California credit.

Massachusetts expanded its state credit from 23 percent to 30 percent of the federal credit, while Vermont and New Jersey saw similar increases from 32 percent to 36 percent and 35 percent to 40 percent respectively. Meanwhile, Louisiana expanded its EITC from 3.5 percent 5 percent of the federal credit.

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